The International Monetary Fund, IMF, has revealed that the decline in China’s economy is detrimental to African countries, Nigeria included, noting that it would greatly affect the nation’s economic fortune, News About Nigeria reports.
According to the IMF, China has deep economic ties with Nigeria and other sub-Saharan countries in Africa, which has spanned over 20 years, stating that a decline in its economy may affect growth in Nigeria by 0.5 percentage points on average.
The Organization noted that China’s recovery from the COVID-19 pandemic has slowed recently due to a downturn in property and a weakening demand for its manufactured goods as global growth has also slowed.
It further noted that 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, as was seen in the latest Regional Economic Outlook. However, for oil-exporters, such as Angola and Nigeria, the loss could be 0.5 percentage points on average.
IMF also revealed that China is the region’s largest single-country trading partner, as it buys one-fifth of the region’s exports which includes metals, minerals, and fuel and in return, provides most of the manufactured goods and machinery imported in the region.
The IMF has, however, proposed that more taxes and higher interest rates be introduced, especially after the subsidy removal.
It noted that since China is a major lender to the region, cut banks in loans are expected to be felt in Angola, Cameroon, Kenya, Nigeria, and Zambia, where the country is the largest bilateral official lender.
The IMF further called on sub-Saharan African countries to adapt to the declining economic growth in China by building resilience through increased inter-African trade and by rebuilding buffers, including through tax policy reforms and improvements to revenue administration.