China’s slowing economy to affect Nigeria – IMF

The International Monetary Fund has disclosed that Nigeria’s economy is expected to be impacted by China’s slowing development.

According to the IMF, Nigeria’s growth could be impacted by China’s recent decline in growth by an average of 0.5 percentage points because China has established strong economic relations with sub-Saharan African nations over the past 20 years.

China is the region’s biggest trading partner overall, supplying the majority of manufactured goods and machinery imported into the region as well as purchasing one-fifth of the region’s exports, which include metals, minerals, and petroleum, according to the IMF.

In an article headlined “China’s Slowing Economy Will Hit Sub-Saharan Africa’s Growth,” the IMF disclosed this.

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It said, “However, China’s recovery from the pandemic has slowed recently due to a property downturn and flagging demand for its manufactured goods as global growth has also slowed.

“This matters for Africa. A one percentage point decline in China’s growth rate could reduce average growth in the region by about 0.25 percentage points within a year, according to the latest Regional Economic Outlook. For oil-exporters, such as Angola and Nigeria, the loss could be 0.5 percentage points on average.”

It went on to say that sovereign credit to sub-Saharan Africa dropped below $1 billion last year, the lowest level in almost two decades, as a result of China’s faltering economy. It made clear that the reduction signals a move away from large-scale infrastructure funding.

The International Monetary Fund (IMF) observed that sub-Saharan African nations must strengthen their resilience to China’s slowing growth and reduced economic involvement by boosting intra-African trade and reestablishing safety nets, which may involve modifying tax laws and enhancing revenue management.

“The strong demand for minerals that support renewable energy development could provide an opportunity for countries to forge new trade relationships and develop more local processing capabilities. Countries can improve their competitiveness by creating a favorable business environment, investing in infrastructure, and deepening domestic financial markets.”