Lagos — Based on fears that the coronavirus outbreak in China will hit oil demand, the International Monetary Fund, IMF, in its latest forecast, has cut Nigeria’s growth forecast for this year from 2.5% to 2%.
The IMF said growth was still recovering, but inflation was rising, which, along with external shocks, would weaken Nigeria’s foreign exchange reserves due to its deteriorating terms of trade and capital outflows.
Nigeria’s growth rose to 2.28% in third quarter of last year after its crude oil production rose to almost 2 million barrels per day.
Oil prices fell below $57 a barrel on Tuesday due to concern that coronavirus outbreak could hit demand in China, one of world’s highest importer of crude oil.
Growing concern that OPEC and its partners would no longer cut output to support prices has also plagued the market.
“Under current policies, the outlook is challenging,” the IMF said in a statement, following a consultation with the government and central bank officials, as well as banking and private sector representatives.
“Structural reforms … remain essential to boosting inclusive growth.”
According to the Nigerian Bureau of Statistics on Tuesday, Nigeria’s inflation rate rose to 12.13% in January.