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…Upgrades growth forecast to 4.2% by 2026
…Rebasing lifts GDP by 40.8%, inflation seen easing next year
From Uche Usim, Washington DC
The International Monetary Fund (IMF) has revised upward the country’s growth outlook in its latest World Economic Outlook (WEO) report.
According to the report released on Tuesday in WashingtonDC, Nigeria’s real gross domestic product (GDP) is projected to grow by 3.9 per cent in 2025 and 4.2 per cent in 2026, which signals renewed optimism over Africa’s largest economy. The new forecast represents one of the sharpest upward revisions among emerging markets, reflecting stronger domestic fundamentals, improving investor confidence, and a recovering oil sector.
The Washington-based Fund noted that the new figures mark a 0.5 percentage point increase from its July 2025 update and a 0.9 percentage point rise compared to the April edition. The 2026 forecast was also lifted by 1.5 percentage points from earlier projections.
IMF analysts attributed the improved outlook to “supportive domestic factors, higher oil production, a friendlier fiscal stance, and limited exposure to the ongoing trade tensions driven by U.S. tariff adjustments.”
Speaking on Nigeria’s Growth Outlook at a media briefing, the Division Chief, Research Department, IMF, Denz Igan,
said: “For 2025, we have revised Nigeria’s growth rate upward to 3.9 percent, which is 0.5 percentage point higher than our previous projection. We have also upgraded the 2026 forecast by 0.9 percentage point, to 4.2 percent.
“Looking back, the 2024 GDP growth estimate has been revised upward to 4.1 percent, 0.7 percentage point higher than earlier figures. This reflects the authorities’ GDP revision and rebasing exercise, which provides broader coverage of economic activity, including parts of the informal sector previously not captured.
“For 2025 and 2026, the upward revisions mainly reflect reduced uncertainty and Nigeria’s limited exposure to U.S. tariffs, given its relatively low dependence on global trade. Since July, we’ve also seen exchange rate appreciation, stronger financial conditions supported by rising investor confidence, and a supportive fiscal stance.
“In addition, hydrocarbon growth has been revised upward due to higher oil production and improved security in producing areas. Together, these factors contribute to a more positive outlook for Nigeria’s economy.”
Speaking on the new forecast for Sub-Saharan Africa, Igan, said: “For Sub-Saharan Africa, we have upgraded growth projections. Growth for 2025 has been revised up by 0.2 percentage point, and the same applies to 2026. We now project 4.1 per cent growth this year and 4.4 per cent next year.
“This resilience across the region has been supported by macroeconomic stabilisation measures and ongoing reform efforts in several key economies, notably Ethiopia and Nigeria.
“That said, vulnerabilities remain. Resource-dependent and conflict-affected countries continue to face significant headwinds, and our medium-term outlook indicates that low-income economies in the region are still grappling with a widening per capita income gap compared to advanced economies.
“In such an environment, it is crucial for countries to strengthen institutions, deepen structural reforms, and mobilise domestic revenue through effective tax reforms. Additionally, improving debt management, transparency, and governance, alongside broader structural reforms, will be key to unlocking the region’s economic potential.”
Economic watchers say Nigeria’s growth momentum is riding on a cocktail of positive forces, from ramped-up crude oil output and reduced theft in the Niger Delta, to a more transparent foreign exchange regime and improved fiscal coordination between federal and subnational governments.
The IMF observed that the Federal Government’s decision to intensify fiscal reforms and deepen public-private partnerships in infrastructure would continue to buoy investor confidence in the medium term.
“The combination of easing inflationary pressures, ongoing exchange rate adjustments, and rising oil production should sustain growth momentum through 2026,” the report noted.
Inflation to ease gradually
Nigeria’s inflation, which has been one of the most stubborn in Sub-Saharan Africa, is expected to drop from 31.4 percent in 2024 to 23.0 percent in 2025, and further to 22.0 percent in 2026.
Analysts say the gradual decline reflects improvements in local food production, moderation in global commodity prices, and the Central Bank of Nigeria’s (CBN) sustained tightening of monetary policy to tame excess liquidity.
However, the Fund cautioned that inflationary pressures could resurface if fiscal discipline weakens or if external shocks, such as oil price volatility, hit the economy again.
“While progress is visible, authorities must stay the course on reforms, especially those aimed at curbing fiscal leakages and improving non-oil revenue mobilization,” the IMF advised.
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Current account, per capita output show resilience
The report also shows that Nigeria’s current account balance is projected at 5.7 percent of GDP in 2025 before narrowing slightly to 3.6 percent in 2026, supported by stronger oil exports and resilient remittance inflows.
In addition, output per capita, a key measure of productivity and welfare, is expected to grow by 1.9 percent in 2025 and 1.8 percent in 2026, indicating modest but steady improvement in living standards.
For many Nigerians still battling with high costs of living, the news offers a ray of hope that recent fiscal and monetary adjustments could finally begin to yield tangible results.
In its classification tables, the IMF grouped Nigeria among Emerging Market and Middle-Income Economies (EMMIEs) and categorized it as a Net Debtor country.
Regionally, Nigeria remains the economic anchor of Sub-Saharan Africa (SSA) and a major fuel exporter, with petroleum products accounting for more than 50 percent of total exports between 2020 and 2024.
The report shows that Nigeria contributes 1.8 percent to the GDP of all emerging and developing economies (based on purchasing power parity, PPP) and 1.1 percent to global GDP. The country also represents 3.4 percent of the EMDE population and 2.9 percent of the world’s total population.
Economists say these metrics reaffirm Nigeria’s importance as a regional powerhouse and underscore why global institutions track its macroeconomic shifts so closely.
Rebasing lifts Nigeria’s GDP by 40.8 percent
One of the most notable developments highlighted in the WEO is Nigeria’s national accounts rebasing exercise, which has significantly altered its economic profile.
According to the IMF, Nigeria’s national accounts have been revised and rebased to 2019 as the new base year, replacing the old 2010 benchmark. The move resulted in a 40.8 percent upward revision in nominal GDP for 2019, offering a clearer and more modern picture of the economy’s structure.
Experts say the rebasing aligns Nigeria’s statistics with international standards, including the 2008 System of National Accounts (SNA), Balance of Payments Manual 6 (BPM6), and Government Finance Statistics Manual 2014 (GFSM 2014).
The exercise also expanded coverage to capture sectors that were previously underreported, such as the digital economy, informal agriculture, social insurance schemes, pension and health insurance, quarrying, and modular oil refining.
Data sources included the National Business Sample Census, Survey of Establishments, National Agricultural Sample Census and Survey, and the 2019 and 2023 Nigeria Living Standards Surveys.
Economists hailed the update as long overdue, saying it provides a more accurate representation of Nigeria’s true productive capacity and will aid policy formulation going forward.
“This rebasing gives us a sharper lens to see where the economy is truly growing and where gaps remain,” said one Abuja-based financial analyst. “It shows that the Nigerian economy is far more diversified than earlier captured.”
Nigeria’s limited exposure to global trade shocks
The IMF report also points out that Nigeria’s limited exposure to U.S. tariffs and global trade shocks has shielded it from some of the headwinds hitting other emerging economies.
While Asian and Latin American markets have faced significant export declines due to higher tariffs and global supply disruptions, Nigeria’s oil exports—still largely tied to long-term contracts—have proven relatively stable.
The report, however, warns that the country’s over-reliance on crude oil remains a vulnerability, especially as the global energy transition accelerates. It urges the Nigerian government to “leverage current fiscal space to invest more aggressively in renewable energy, agro-processing, and manufacturing” to cushion future shocks.
The IMF’s optimism comes with a caveat: reforms must continue without wavering. The report emphasized that sustaining the growth trajectory will depend on governance consistency, revenue diversification, and social investment.
It praised the government’s ongoing efforts in financial transparency, tax administration, and social safety programs but called for stronger institutional frameworks to consolidate gains.
“Policy credibility and reform consistency are vital. Nigeria’s growth potential is undeniable, but it must be supported by good governance and stable macroeconomic management,” the Fund noted.
