Both these economies are in recession but Nigeria’s will grow faster than SA’s in 2018

PUBLISHED: Tue, 01 Aug 2017 21:06:45 GMT


The article below was written by Momentum SP Reid

The Vanguard reports that the International Monetary Fund (IMF) has
projected that Nigeria’s economy will grow at a faster pace than South
Africa’s in 2018, see table 1. According to its World Economic Outlook, WEO, for July
2017, the IMF said Nigeria will grow at 1.9% in 2018, while South Africa will
only climb by 1.2%.

In 2016, the Nigerian economy contracted by 1.6%, while South Africa
expanded by 0.3%. Projections for 2017 put South Africa’s growth at 1%,
while Nigeria is expected to muster just 0.8%. The Bretton Woods
institution, which held global growth projections at 3.5% in 2017 and 3.6%
in 2018, said growth was marked down in South Africa due to elevated
political uncertainty.

Table 1. Overview of the World Economic Outlook Projections
(Percent change unless noted otherwise)
Year over Year
Q4 over Q4 2/
EstimateProjectionsDifference from April 2017 WEO Projections 1/EstimateProjections
World Output3.
Advanced Economies2.–
United States2.–0.2–
Euro Area2.
United Kingdom2.–
Other Advanced Economies 3/
Emerging Market and Developing Economies4.
Commonwealth of Independent States–
Excluding Russia– . .. . .. . .
Emerging and Developing Asia6.
India 4/
ASEAN-5 5/
Emerging and Developing Europe4.–
Latin America and the Caribbean0.1––0.1–0.1–
Middle East, North Africa, Afghanistan, and Pakistan2.–0.1. . .. . .. . .
Saudi Arabia4.–0.3–
Sub-Saharan Africa3. . .. . .. . .
Nigeria2.7– . .. . .. . .
South Africa1.–
Low-Income Developing Countries4.–0.1–0.1. . .. . .. . .
World Growth Based on Market Exchange Rates2.
World Trade Volume (goods and services) 6/ . .. . .. . .
Advanced Economies4.–0.1. . .. . .. . .
Emerging Market and Developing Economies0. . .. . .. . .
Commodity Prices (U.S. dollars)
Oil 7/–47.2–15.721.20.1–7.70.416.26.2–0.8
Nonfuel (average based on world commodity export weights)–17.5–1.85.4–1.4–3.1–
Consumer Prices
Advanced Economies0.–0.1–
Emerging Market and Developing Economies 8/–
London Interbank Offered Rate (percent)
On U.S. Dollar Deposits (six month)–0.1–0.6. . .. . .. . .
On Euro Deposits (three month)–0.0–0.3–0.3– . .. . .. . .
On Japanese Yen Deposits (six month) . .. . .. . .
Source: IMF

“In Sub-Saharan Africa, the outlook remains challenging. Growth is
projected to rise in 2017 and 2018, but will barely return to positive territory
in per capita terms this year for the region as a whole–and would remain
negative for about a third of the countries in the region,” the IMF said.

“The slight upward revision to 2017 growth relative to the April 2017 WEO
forecast reflects a modest upgrading of growth prospects for South Africa,
which is experiencing a bumper crop due to better rainfall and an increase in
mining output prompted by a moderate rebound in commodity prices.
However, the outlook for South Africa remains difficult, with elevated political
uncertainty and weak consumer and business confidence, and the country’s
growth forecast was consequently marked down for 2018.”

The IMF also added that global growth will be aided by growth in the US and
the UK, who are projected to grow at 2.1% and 1.5%, respectively.
“China’s growth projections have also been revised up (6.7%), reflecting a
strong first quarter of 2017 and expectations of continued fiscal support.
Inflation in advanced economies remains subdued and generally below
targets; it has also been declining in several emerging economies, such as
Brazil, India, and Russia.”

The IMF mentioned the risks threatening the strength and durability of the
recovery such as election related risk, political uncertainty, failure to lift
potential growth and make growth more inclusive and rising geopolitical
tensions, among others. With the help of resilient global growth, we believe
that both Nigeria and South Africa have the potential to grow above the
forecast, assuming that appropriate policies are implemented to lessen
some of the risks mentioned above.

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