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IMF highlights threats to Nigeria's economic growth

A conference room is prepared at the International Monetary Funds Headquarters 2 building ahead of the annual meetings in Washington DC on October 9 IMF: The global recovery is at risk from the forces of anti-globalisation
Remigio Civitarese | 13 Ottobre, 2017, 17:46

In its WEO earlier this year, the IMF had raised projections for Nigeria's economic growth to 0.8 percent, from the 0.2 per cent that it had projected in the WEO report of October 2016, saying the revision reflects high oil production due to security improvements in the country's oil producing region.

"About a third of banks by assets may struggle to achieve sustainable profitability, underscoring ongoing challenges and medium-term vulnerabilities", the IMF said in the report.

Germany and Spain received predictions of 2.0pc and 3.1pc growth respectively, with France lower at 1.6pc, rising to 1.8pc in 2018.

In an analysis certain to be seized on by Labour as backing for its tax strategy, the IMF used its influential half-yearly fiscal monitor to attack the rationale for the reductions in tax for the highest earners in recent decades.

It therefore appears that the IMF will play a crucial role in yet another review, and it is possible Lagarde will reveal the Fund's intentions to Tsakalotos and Houliarakis during Saturday's meeting, a week before the creditors' representatives are scheduled to return to Athens. "Among emerging market and developing economies, higher domestic demand in China and continued recovery in key emerging market economies supported growth in the first half of 2017".

The Fund acknowledges an inequality-dampening tax code "could be difficult to implement politically, because better-off individuals tend to have more political influence, for example, through lobbying, access to media, and greater political engagement". "Importantly, we find that some advanced economies can increase progressivity without hampering growth, as long as progressivity is not excessive".

But it says that excessive disparities in income "can erode social cohesion, lead to political polarisation and lower economic growth". The picture is very different from early last year, when the world economy faced faltering growth and financial market turbulence.

"Many countries should emphasize reducing opportunities for tax evasion and avoidance".

"In addition, tax systems are less progressive than indicated by the statutory rates, because wealthy individuals have more access to tax relief", Gaspar said in the blog co-written with Mercedes Garcia-Escribano.

The International Monetary Fund, IMF, Tuesday, listed policy implementation, forex market segmentation, and banking system fragilities as major threats to sustained economic growth in Nigeria.

According to IMF's Economic Counsellor, Maurice Obstfeld, "The global recovery is continuing, and at a faster pace". As the global economy improves, it lifts U.S. growth as well.

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