10042019 - Politicians, traditional rulers aiding bandits — DEFENCE MINISTER

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22 Vanguard, WEDNESDAY, APRIL 10, 2019

IMF reviews Nigeria’s growth

upwards to 2.1%

...warns US-China trade tension will impact crude oil prices

Stories By Emeka Anaeto,

Emma Ujah and Peter

Egwuatu in Washington DC

The

International

Monetary Fund,

IMF, has effected an

upwards review of Nigeria’s

economic growth rate

projection to 2.1 percent, a

second review by the

Bretton Woods institution on

the forecast this year alone.

Earlier in January it had

reviewed the statistics

downwards to 2.0 percent

from initial figure of 2.3

percent referencing

challenges in the

international oil prices. But

oil prices have been

stabilizing since February

this year.

The positive forecast was

also made against the

backdrop of similar upwards

review on the oil producers

and other sub-Sahara Africa

economies in 2019 to 2.0

percent (from 1.3 percent in

2018) and 3.5 percent (from

3.0 percent in 2018)

respectively. These were

contained in the 2019 “World

Economic Outlook”, report

of the IMF released

yesterday at the ongoing

2019 Spring World Bank /

IMF meeting in Washington

DC, United States of

America, USA.

But in a near conflicting

position, the Chief

Economist & Director of

Research, IMF, Gita

Gopinath, at a press

briefing on the report also

yesterday said: “ Nigeria is

likely going to experience a

weakening in economic

growth in the year 2019

following continued

weakness of the global

expansion.”

She also stated that IMF

has projected a further 3.7

percent expansion for the

Sub Saharan Africa region in

2020 while that of Nigeria

was projected at 2.5 percent.

Trade tension could crash

oil prices

However, Gopinath said

that a continued trade

tension between the US and

China would have a negative

impact on oil prices and

other commodities.

Responding to a question

on the impact of the trade

tension on Sub-Saharan

Africa, the IMF Chief

stated: “A continued trade

tension between the US and

China would further weaken

the global economy and this

will in turn have a negative

impact on prices of

commodities, including oil.

“With this weakness

expected to persist into the

first half of 2019, our new

World Economic Outlook

(WEO) projects a slowdown

in growth in 2019 for 70

percent of the world

economy. Global growth

softened to 3.6 percent in

Christine Lagarde, IMF

President

2018 and is projected to

decline further to 3.3 percent

in 2019. The downward

revision in growth of 0.2

percentage points for 2019

from the January projection

is also broad based.”

Emerging Markets

Commenting on emerging

markets, Gopinath said: “

Emerging markets have

experienced some

resumption in portfolio flows,

a decline in sovereign

borrowing costs, and a

strengthening of their

currencies relative to the US

dollar. While the

improvement in financial

markets has been rapid,

those in the real economy

have been slow to

materialize. Measures of

industrial production and

investment remain weak for

now in many advanced and

emerging market economies,

and global trade has yet to

recover.

“With improved prospects

for the second half of 2019,

global growth in 2020 is

projected to return to 3.6

percent. This recovery is

precarious and predicated on

a rebound in emerging

market and developing

economies, where growth is

projected to increase from

4.4 percent in 2019 to 4.8

percent in 2020. Specifically,

it relies on an expected

rebound in growth in

Argentina and Turkey and

some improvement in a set

Eurodad, a European

network on debt and

development, has warned of

an imminent global debt

crises.

Nigeria’s

Debt

Management Office, DMO,

last week announced that

the country’s public debt

rose year-on-year by 12.25

percent to N24.4 trillion at

end of 2018.

Reacting to the new IMF

World Economic Outlook,

released at the on-going

IMF/World Bank Spring

Zainab Ahmed, Minister of

Finance

of other stressed developing

economies, and is therefore

subject to considerable

uncertainty. Growth in

advanced economies will

slow slightly in 2020, despite

a partial recovery in the euro

area, as the impact of US

fiscal stimulus fades and

growth tends toward the

modest potential for the

group, given aging trends

and low productivity

growth.”

Global growth Beyond 2020

She said: “Beyond 2020,

global growth is expected to

stabilize at around 3½

percent, bolstered mainly by

growth in China and India

and their increasing weights

in world income. Growth in

emerging market and

developing economies will

stabilize at 5 percent, though

with considerable variance

as emerging Asia continues

to grow faster than other

regions. A similar pattern

holds for low-income

countries with some,

particularly commodity

importers, growing rapidly

but others falling further

behind the advanced world

in per capita terms.

Risks to global growth

“While the global economy

continues to grow at a

reasonable rate and a global

recession is not in the

baseline projections, there

are many downside risks.

Tensions in trade policy

could flare up again and play

out in other areas (such as the

auto industry), with large

disruptions to global supply

chains. Growth in systemic

economies such as the euro

area and China may surprise

on the downside, and the

risks surrounding Brexit

remain heightened. A

deterioration in market

sentiment could rapidly

tighten financing conditions

in an environment of large

private and public sector debt

in many countries, including

sovereign-bank doom loop

risks” she said.

IMF’s Policy

recommendations

According to her: “Given

these risks, it is imperative

that costly policy mistakes

are avoided. Policymakers

need to work cooperatively to

help ensure that policy

uncertainty doesn’t weaken

investment. Fiscal policy will

need to manage trade-offs

between supporting demand,

protecting social spending,

and ensuring that public debt

remains on a sustainable

path, with the optimal mix

depending on countryspecific

circumstances.

Financial sector policies

must address vulnerabilities

proactively by deploying

macro prudential tools (such

as counter-cyclical capital

buffers)a task made more

urgent by the possibility that

interest rates will remain low

for longer. Monetary policy

should remain data

dependent, be well

communicated, and ensure

that inflation expectations

remain anchored.

“Across all economies, the

imperative is to take actions

that boost potential output,

improve inclusiveness, and

strengthen resilience. There

is a need for greater

multilateral cooperation to

resolve trade conflicts, to

address climate change and

risks from cybersecurity, and

to improve the effectiveness

of international taxation. This

is a delicate moment for the

global economy. If the

downside risks do not

materialize and the policy

support put in place is

effective, global growth

should rebound. If, however,

any of the major risks

materialize, then the

expected recoveries in

stressed economies, exportdependent

economies, and

Debt body warns of escalating burden

Meetings in Washington DC,

USA, yesterday, the body

said that many poor

countries were already in

debt trouble.

Eurodad Head of Policy,

Mr. Bodo Ellmers, said,

“Many poor countries have

already been struck by debt

crises. Progress on

Sustainable Development

Goals could be derailed or

even reversed. Poverty and

inequality could rise, if no

counter measures are taken.

“High debt levels became

a key constraint for

spending on infrastructure

projects and public goods in

poor countries. Every Euro

that goes to creditors is a

Euro that does not go to

poverty eradication and

sustainable development.

“Governments meet for

IMF Spring Meetings in

Washington this week. Next

week, they convene at the

UN Financing for

Development Forum in New

York.

highly-indebted economies

may be derailed. In that case,

policymakers will need to

adjust. Depending on

circumstances, this may

require synchronized though

country-specific fiscal

stimulus across economies,

complemented by

accommodative monetary

policy. Lastly, adequate

resources for multilateral

institutions remain essential

to retain an effective global

safety net, which would help

stabilize the global

economy.”

“These are crucial

opportunities to solve debt

crises in a fair, speedy and

sustainable manner.

“The IMF needs to do

more to ensure that their

programmes do no more

harm to the poor. When a

crisis strikes, IMF loans are

often the last resort for

affected countries.

“But they come with harsh

austerity and adjustment

conditions attached. The

IMF conditionality review

that takes place while the

Spring Meetings are ongoing

should be used to

ensure that IMF

programmes respect

democracy and human

rights.

“We also call on the IMF

to conduct Human

T i g h t s I m p a c t

Assessment of all its

programmes.”

Our challenges

many but

surmountable -

New W/Bank

President

The President of the

World Bank Group, Mr.

David Malpass, assumed

duties yesterday, saying that

challenges facing the global

economy were many but that

he would work with

enthusiasm to overcome

them.

He spoke at the on-going

IMF/World Bank Spring

Meetings in Washington DC,

USA.

His said: “The challenges

are many: there is poverty ,

there is the need for

stronger growth, there is

climate change, there is the

role of women- full

incorporation of woman into

economies.

“There is a need for

stronger private sector and

also many states are in

fragility on in conflict. Those

are clear, focused goals for

the bank.

“There is a clear mission

for the bank: poverty

alleviation and shared

prosperity. These goals are

urgent and I think we need

a clear focus on achieving

outcomes.

“I am looking forward to

undertaking this task

enthusiasm. The bank has

resources, it has staff, and it

has the ability to actually

have an impact.”

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