Uptick in the Fund’s global growth forecasts
The IMF’s new World Economic Outlook (WEO) has raised its global growth forecasts for this year and 2018 marginally from three months ago to 3.6% and 3.7%. Among the country contributions, the forecasts for the US have been lifted from 2.1% in both years to 2.2% and 2.3%. We note the assumption that official policies will be unchanged (ie there will be no fiscal stimulus). Elsewhere, compared with July, the latest outlook has stronger growth both years in the Eurozone, Japan, Brazil, Russia and China. India still has the fastest growth next year, at 7.4%.
- Short-term risks are seen as broadly balanced, medium term tilted to the downside.
- The latter are: a sizeable tightening in global financial conditions; financial turmoil in emerging economies, notably China; persistently low inflation in developed economies; a reversal of financial regulation; protectionism; and non-economic and geopolitical factors.
- The price assumptions, based on the futures markets, for the Fund’s basket of three crude blends (including UK Brent) are now an increase of 17.4% this year to US$50.3/b and a small decline for 2018 to US$50.2/b.
- The outlook’s forecasts for growth in Nigeria this year and next are again unchanged at 0.8% and 1.9%. In what amounts to a commentary on the FGN’s policymaking, projections in the WEO show GDP growth per caput on a PPP basis negative through to 2022.
- Nigeria is expected to emerge from recession this year due to a recovery in oil output and some positives in agriculture. Predictably, the Fund continues to view the CBN’s multiple currency practices, which it terms market segmentation in the fx market, as a barrier to broader recovery.
FIRS budget, others passed: The Senate Tuesday passed the N152bn (US$421.9m) 2017 budget of the Federal Inland Revenue Service (FIRS). Approving the report of its Committee on Finance, the Senate approved N75.8bn (US$210.4m) as personnel cost, representing 49.6% of the total FIRS budget, N46bn (US$127.7m) for overheads, representing 30.1%, and N31bn (US$86m) for capex, representing 20.3%. (Source: Thisday)
Buhari seeks N’Assembly approval for US$5.5bn external loans: President Muhammadu Buhari has sought the approval of the National Assembly for a US$3bn external loan for re-financing domestic maturing debts and the issuance of a US$2.5bn Eurobond for the funding of the 2017 capital budget. Buhari explained that the US$3bn being sought from the international capital market will be deployed to refinance maturing domestic debt to achieve more stability in the country’s debt stock and create more borrowing space in the domestic market for the private sector. (Source: Thisday)
IMF – Nigerian economy to grow by 1.9% in 2018 but subdued by population growth: The International Monetary Fund (IMF) has projected that the Nigerian economy will expand by 1.9% in 2018 but will remain subdued relative to population growth of 2.7%. The IMF also pointed out that concerns about policy implementation and market segmentation in the foreign exchange market would be a challenge in the medium-term. (Source: Thisday)
FG may ask MDAs to buy local products at higher prices: The federal government (FG) may direct its Ministries, Departments and Agencies (MDAs) to purchase locally made products even at prices up to 35% higher than foreign products. This followed a proposal sent to the FG by the Manufacturers Association of Nigeria asking it to establish price preferential margins, recognising that Nigerian-made products could cost more because of the peculiarities of the nation’s economy. (Source: Punch)
We’re using recovered looted funds to finance 2017 budget – FG: The federal government (FG) is using part of the stolen funds recovered from those that looted to finance the 2017 budget, President Muhammadu Buhari has said. (Source: Punch)