IMF sees Nigeria’s growth rising to 4.3% in 2027 as inflation eases

… Says inflation to decline to 14.7% in 2027

The International Monetary Fund (IMF) has projected Nigeria’s economic growth to strengthen to 4.3 percent in 2027, from 4.2 percent in 2026, as inflation moderates, while warning that higher prices of essential goods could worsen poverty and food insecurity.

In its latest World Economic Outlook (WEO), the IMF projected Nigeria’s real gross domestic product (GDP) growth at 4.0 percent in 2025, rising to 4.2 percent in 2026 and 4.3 percent in 2027.

The Fund also projected consumer price inflation to decline from 23.0 percent in 2025 to 15.6 percent in 2026 and 14.7 percent in 2027, indicating a gradual moderation in price pressures.

However, the improved macroeconomic outlook is not expected to translate automatically into better living conditions for Nigerians, as the Fund cautioned that higher prices for essential goods could aggravate existing economic hardship.

Responding to questions during the WEO press briefing at the ongoing annual meetings of the IMF and the World Bank in Bangkok, Thailand, Deniz Igan, Chief of the IMF Research Department’s World Economic Studies Division, said Nigeria’s economic growth had held up, but poverty remained high and many households continued to face difficulties.

She said policymakers needed to balance the immediate needs of the population, particularly food and energy security, with the need to maintain medium-term fiscal stability.

According to Igan, countries experiencing a cost-of-living crisis, in which essential goods become more expensive, should consider targeted and temporary income support for vulnerable households.

Using Nigeria as an example, she said cash transfers could help mitigate high poverty levels and protect food security, provided they were aligned with a sustainable medium-term fiscal framework.

She added that such interventions should be accompanied by improvements in the quality of public expenditure and revenue collection.

The IMF’s warning highlights the challenge facing Nigeria as policymakers seek to consolidate macroeconomic stability while ensuring that improvements in key economic indicators translate into tangible benefits for households.

Regional growth outlook

The IMF projected economic growth in sub-Saharan Africa to remain stable at 4.5 percent in 2026 and 2027, although it noted that the regional average masks significant differences among countries.

The Fund attributed these differences to variations in policy space, implementation of reforms, exposure to commodity prices, climate shocks and access to external financing.

It said Nigeria’s outlook was supported by improved macroeconomic stability and favourable terms-of-trade effects. However, higher prices for essential goods were expected to further aggravate poverty and food insecurity.

The IMF also noted that oil-importing, non-resource-intensive economies were more adversely affected by higher energy and food prices, while some larger economies continued to benefit from earlier stabilisation measures and reforms.

Despite the stable regional growth projection, the Fund said countries across sub-Saharan Africa faced headwinds from declining official development assistance and remained largely outside the artificial intelligence-driven global technology upswing.

Growth in the rest of the region, excluding the major economies highlighted in the report, was projected to slow from 5.6 percent in 2025 to 5.5 percent in 2026 and 5.3 percent in 2027.

The projections suggest that while sub-Saharan Africa is expected to maintain growth, the benefits will vary considerably across economies, depending on domestic policy choices and exposure to external shocks.

Global pressures complicate outlook

The IMF’s projections come as the global economy faces mounting pressures from rising energy and commodity prices, driven partly by the conflict in the Middle East, alongside a technology boom fuelled largely by artificial intelligence.

Silvana Tenreyro, Economic counsellor and director of the IMF’s Research Department, said the interaction between these forces was creating competing pressures on global economic activity while pushing inflation higher.

Presenting the global economic outlook, Tenreyro said rising energy and commodity prices were acting as a negative global supply shock, raising prices and hampering economic activity, while the artificial intelligence-driven boom was supporting demand, investment and trade.

“While these demand and supply forces pull activity in opposite directions, both forces put upward pressures on inflation,” she said.

The IMF projected growth in emerging markets and developing economies to slow from 4.5 percent in 2025 to 3.7 percent in 2026 before recovering to 4.4 percent in 2027.

It said the outlook varied across regions, reflecting differences in commodity dependence, exposure to the conflict in the Middle East, remittances, tourism receipts, financial conditions, policy frameworks and countries’ positions in the global technology value chain.

Growth in emerging and developing Asia was expected to moderate, with China’s economic growth projected at 4.5 percent in 2026, as higher global oil prices, prolonged uncertainty and structural challenges weighed on activity.

India, by contrast, was projected to grow by 7.0 percent in 2026, supported by resilient domestic demand and strong services activity.

In the Middle East and Central Asia, growth was projected to contract by 0.3 percent in 2026 before rebounding to 6.3 percent in 2027, reflecting the effects of disruptions associated with the conflict and the expected subsequent recovery.

For Nigeria, the combination of moderating inflation and stronger projected growth offers an improved macroeconomic outlook, but the IMF’s warning underscores the need for policies that protect vulnerable households without undermining fiscal sustainability.

The central challenge remains ensuring that economic stabilisation translates into improved purchasing power, stronger food security and a meaningful reduction in poverty, IMF said.