Nigeria’s Growth Slower Than Expected – IMF
The International Monetary Fund (IMF) has reduced Nigeria’s economic growth projection for 2025, citing declining oil prices as a major concern.
In its April 2025 World Economic Outlook, released on Tuesday, the IMF revised Nigeria’s real GDP growth forecast downward from 3.2% to 3.0%. This new projection is also lower than the 3.4% growth rate estimated for 2024. The Fund attributed the downgrade to the impact of falling oil prices on the country’s fiscal and external balances, noting that energy exports remain Nigeria’s primary source of public revenue and foreign exchange.
Looking ahead, the IMF expects the growth rate to slow even further, projecting a 2.7% increase in GDP by 2026.
According to the IMF, Sub-Saharan Africa’s economic growth is expected to dip slightly from 4.0% in 2024 to 3.8% in 2025, before recovering to 4.2% in 2026.
For Nigeria, the forecast has been lowered by 0.2 percentage points for 2025 and 0.3 points for 2026. In contrast, South Africa’s forecast was revised down more sharply due to weak performance and increased global economic uncertainty.
Despite Nigeria currently maintaining a current account surplus, the IMF expects this position to weaken in the coming years. It estimates the current account balance will decline from 9.1% of GDP in 2024, to 6.9% in 2025, and further down to 5.2% in 2026.
The Central Bank of Nigeria (CBN) had recently reported a $6.83 billion balance of payments surplus for 2024, largely driven by a $13.17 billion goods trade surplus. However, the IMF warns that this surplus may not be sustained if oil prices remain low.
JP Morgan previously cautioned that Nigeria could slip into a current account deficit if crude oil prices stay below the $60 per barrel fiscal breakeven point.
On a more optimistic note, Fitch Ratings projected that Nigeria’s current account surplus—estimated at 6.6% of GDP in 2024—will average 3.3% between 2025 and 2026, supported by improved local refining capacity and reforms in the energy sector.
Inflation remains a pressing issue. The IMF projects Nigeria’s headline inflation will average 26.5% in 2025, down from 33.2% in 2024, but could spike to 37.0% in 2026.
These figures follow the rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics in January 2025, updating the base year from 2009 to 2024. Post-rebasing, inflation fell to 24.48% in January, down from 34.80% in December 2024. It further declined to 23.18% in February, before slightly rising to 24.23% in March, indicating ongoing pressure on consumer prices.
To combat inflation, the CBN kept its Monetary Policy Rate (MPR) steady at 27.5% in February. However, with inflation and money supply both rising in March, further rate hikes may be on the horizon.
The IMF also flagged concerns over weak income growth in Nigeria. It forecasts that real output per capita will grow by only 0.6% in 2025 and 0.3% in 2026. These figures fall below the Sub-Saharan African average and suggest that the gains from overall economic growth are not translating into better living standards for most Nigerians
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