IMF Cuts Nigeria’s 2026 Growth Projection to 4.1% from 4.4 per cent
The International Monetary Fund (IMF), in its April 2025 World Economic Outlook, has revised Nigeria’s 2026 economic growth forecast downward to 4.1 per cent, from the 4.4 per cent projected in January. Growth is, however, expected to recover slightly to 4.3 per cent in 2027.
Globally, the IMF projects economic growth at 3.1 per cent in 2026 and 3.2 per cent in 2027. The Fund warned that ongoing geopolitical tensions, particularly conflicts in the Middle East could further dampen global economic performance.
Speaking at the launch of the report during the IMF/World Bank 2026 Spring Meetings in Washington, D.C., IMF Economic Counsellor and Director of Research, Pierre-Olivier Gourinchas, noted that growth projections across Sub-Saharan Africa had generally been downgraded.
He explained that while rising oil prices could offer some support to Nigeria, they would not be enough to shield the country from broader global shocks.
“For many countries, especially energy importers, the effects are negative, although there is some differentiation, as a number of countries in the region are also energy exporters,” he said.
Gourinchas added that the IMF is closely monitoring developments in global energy markets and continues to engage with member countries on financing and policy needs.
Across Sub-Saharan Africa, he noted, the region is experiencing slower growth alongside rising inflation, largely driven by global spillovers and declining aid flows.
IMF Division Chief in the Research Department, Deniz Igan, said Nigeria’s revised outlook reflects competing forces within the economy.
“Growth has been revised down by 0.3 percentage points to 4.1 per cent in 2026,” she said. “Higher fuel and fertiliser prices, along with increased shipping costs, are expected to weigh on non-oil sector activity. While higher oil prices provide some offset, the overall impact remains negative.”
She added that a recovery is expected in 2027.
Igan emphasized the importance of maintaining a tight, data-driven monetary policy, alongside close monitoring of exchange rate movements and inflation expectations, to ensure price stability.
On the broader regional outlook, she noted that 2025 had been relatively strong due to resilient global growth, robust oil prices, and favourable financial conditions. However, the situation has since deteriorated.
“Global growth has slowed, non-oil commodity prices have softened, and terms of trade have worsened for oil-importing countries,” she said.
She also highlighted declining foreign aid as a major concern, noting that bilateral aid cuts ranged between 16 and 28 per cent in 2025—a trend expected to continue.
As a result, growth across Sub-Saharan Africa has been downgraded by a cumulative 0.4 percentage points for 2026 and 2027. Meanwhile, median inflation is projected to rise from 3.4 per cent in 2025 to 5 per cent, driven by higher energy and fertiliser costs, fuel shortages, and increasing borrowing costs.
Deputy Director in the IMF Research Department, Petya Koeva-Brooks, also noted that Nigeria’s outlook reflects a balance of opposing forces.
“Higher global oil prices are expected to support government revenues and provide some external buffer, but the overall impact remains negative,” she said.
According to her, rising costs associated with fuel, fertiliser, and shipping—largely driven by global conflicts—will continue to weigh on non-oil sector activity.
“There is some offset from higher oil prices, but on balance, the effect is a drag on growth in 2026, with recovery expected in 2027,” she added.
Koeva-Brooks further warned that Sub-Saharan Africa faces mounting economic headwinds, including weaker global growth, softer commodity prices, worsening trade conditions for oil importers, and declining foreign aid.
She also noted that inflationary pressures across the region are likely to intensify due to rising energy and fertiliser costs, potential fuel shortages, and higher borrowing costs.
On Nigeria specifically, she stressed that the impact is particularly significant given the country’s reliance on agriculture and its sensitivity to fertiliser and food price shocks.
She concluded that continued vigilance by the Central Bank of Nigeria would be critical, emphasizing the need for a tight and data-driven monetary policy to navigate the current economic challenges.