Databank Research has predicted a slowdown in economic growth this year on the back of the International Monetary Fund (IMF) programme.
“Economic compression is inevitable under an IMF programme, we anticipate an economic slowdown from an austerity path chartered by an IMF deal and forecast growth between 2.3 per cent to 3.3 per cent in full year 2023, lower than the real Gross Domestic Product (GDP) growth of 3.6 per cent in the third quarter of 2022,” Databank Research said in its February 2023 Report titled “In the woodland – Banking on the IMF to Discover Path”.
The government set the overall real GDP growth of 2.8 percent, Non-Oil Real GDP growth of 3.0 per cent, and end-December inflation rate of 18.9 per cent.
It said the slump in the growth rate would be influenced by agriculture, industry and services.
The report said, “We expect the agriculture sector to compress slightly, growing at 3.7 per cent, as increased illegal fishing operations and high feed costs continue to hamper the fishing and livestock subsectors”.
Databank Research said growth in the industry sector would be muted at one per cent as the manufacturing subsector was expected to contract due to high input costs and currency pressures.
“We foresee weaker growth of 3.5 per cent in the extractive sector due to the uncertain outlook for oil and gas as global geopolitical tensions continue to undermine the outlook for oil and gas. Again, a resurgence of COVID-19 in China, the biggest oil consumer, poses a downside risk to oil demand,” the report said.
The report said the services sector was forecast to grow by 3.9 per cent as elevated price levels would stifle consumer demand primarily in the trade and
hospitality subsectors, while the debt restructuring would hamper the financial sector’s profitability and growth.
However, the report said the reduction in electronic levy to one per cent might entice more electronic transactions and robust data demand to drive growth in the ICT subsector.