Strong dollar decreases economic output in Nigeria, others — IMF

<p>The International Monetary Fund has said a 10 per cent appreciation in the dollar, linked to global financial market forces, decreased economic output in emerging market economies including Nigeria by 1.9 per cent.</p>, <p>It noted that this decline persisted for two and a half years. The IMF announced that the US dollar strengthened to a 20-year high in 2022, with major implications for the global economy.</p>, <p>According to the IMF, a strong dollar meant that trade and financial channels in emerging market economies like Nigeria were affected.</p>, <p>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.”</p>, <p>The Washington-based lender noted that US dollar appreciations impacted the current accounts of these countries. It explained that current accounts captured the change in saving-investment balances of countries.</p>, <p>It stated, “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.”</p>