From Adanna Nnamani, Abuja
The World Bank has announced a positive outlook for Nigeria’s economy, projecting a growth rate of 3.6 per cent in 2025, following an estimated expansion of 3.4 per cent in 2024.
This optimistic forecast comes as reforms begin to demonstrate their potential in stabilizing the country’s macroeconomic environment.
Released in the Spring 2025 edition of Africa’s Pulse, the World Bank’s predictions contrast with those of the International Monetary Fund (IMF), which has revised Nigeria’s growth estimate for 2025 downward to 3.0 per cent.
The IMF’s April 2025 World Economic Outlook presented a more cautious perspective. It projects a growth rate of 2.7 per cent in 2026, citing challenges related to weaker oil revenues and enduring structural constraints.
Meanwhile, the World Bank’s forecast is largely attributed to improvements in the non-oil sectors, particularly in services such as financial services, telecommunications, and information technology.
Additionally, the report highlights a decrease in inflationary pressures and an enhancement in business sentiment as contributing factors. With sustained implementation of reforms, the World Bank anticipates growth to strengthen to 3.8 per cent by 2027.
The report states, “Economic growth is expected to remain moderate in Nigeria, increasing from 3.4 per cent in 2024 to 3.6 per cent in 2025, and further to 3.8 per cent in 2026–27. The gradual recovery of the Nigerian economy along the forecast horizon is driven primarily by the service sector—specifically, finance, information and communications technology services, and transportation—along with a rebound in oil production aligning with its OPEC+ quota.”
A key point of divergence between the World Bank and IMF lies in their inflation projections. The World Bank forecasts that inflation will ease to 22.1 per cent in 2025, down from 26.6 per cent in 2024, with a further decline to 15.9 per cent by 2027. These estimates follow the recent rebasing of the Consumer Price Index (CPI) by Nigeria’s National Bureau of Statistics (NBS) in January 2025. Conversely, the IMF has a more pessimistic forecast, projecting average inflation at 26.5 per cent for 2025 and a sharp increase to 37.0 per cent in 2026, attributing this to structural inefficiencies and high exchange rate pass-through effects.
While inflation briefly decreased in early 2025 after the CPI are basing, falling from 34.8 per cent in December 2024 to 24.48 per cent in January, reports indicate a rise back to 24.23 per cent in March due to persistent cost-of-living challenges, particularly in food prices.
The World Bank report also identified the Naira as one of the weakest currencies in Africa in 2024, having depreciated by over 40 per cent. This decline was driven by recent exchange rate reforms aimed at unifying and liberalizing Nigeria’s multiple foreign exchange windows. In response, the government has advocated for a market-determined exchange rate regime, which has resulted in improved foreign exchange liquidity and reduced volatility of the Naira. Such reforms are credited with creating a more predictable macroeconomic climate expected to support growth and mitigate inflationary pressures over time.
On the external front, the World Bank projected a slight increase in Nigeria’s current account surplus, rising from 9.2 per cent of GDP in 2024 to 9.4 per cent by 2026. This improvement is attributed to reduced imports, increased remittances, and enhanced oil export earnings. In contrast, the IMF predicts a narrowing of the surplus to 6.9 per cent in 2025 and 5.2 per cent in 2026, highlighting potential risks posed by global oil prices and external demands.
Both organisations commend Nigeria’s ambitious macroeconomic reforms, including the elimination of fuel subsidies, the cessation of central bank deficit financing, and the unification of exchange rates. These initiatives have been recognized for their long-term potential to restore fiscal sustainability and boost investor confidence.
However, the IMF remains reserved, cautioning that inflation persists while income per capita stagnates. The Fund estimates that real per capita income will only grow by 0.6 per cent in 2025, indicating that despite an uptick in headline growth, the benefits experienced by ordinary Nigerians may be limited.