How strengthened US dollar affected Nigeria – IMF
The International Monetary Fund has revealed the strengthening of the United States dollar had continued to affect economic output in Nigeria, as are other emerging market economies.
An emerging market economy is the economy of a developing nation that is becoming more engaged with global markets as it grows.
According to IMF, the US dollar 10 per cent appreciation has
decreased economic output in emerging market economies, including Nigeria, by 1.9 per cent. The decline, the Fund said, has persisted for two and a half years.
It said, “Their real trade volumes decline more sharply, with imports dropping twice as much as exports. Emerging market economies also tend to suffer disproportionately across other key metrics: worsening credit availability, diminished capital inflows, tighter monetary policy on impact, and bigger stock-market declines.”
“As a share of Gross Domestic Product, current account balances (saving minus investment) increase in both emerging market economies and smaller advanced economies, because of a depressed investment rate (there is no clear systematic response for saving). However, the effect is larger and more persistent for emerging market economies.”
Some other notable emerging market economies include India, Mexico, Russia, Pakistan, Saudi Arabia, China, and Brazil. The Fund had, in May, warned that Sub-Saharan Africa could stand to lose the most if the world were split into two isolated trading blocs centered around China or the United States and the European Union. In this severe scenario, sub-Saharan African economies could experience a permanent decline of up to 4 percent of real gross domestic product after 10 years according to our estimates—losses larger than what many countries experienced during the Global Financial Crisis.
