Nigeria Economic Update, Issue 16

The International Monetary Fund (IMF) in their Global Outlook report for April has revised Nigeria’s 2026 real GDP growth forecast downward to 4.1 percent, from 4.4 percent in its January outlook, reflecting rising input costs, particularly fuel, fertiliser, and shipping, which are weighing on non-oil sector activity. This moderation comes despite some offset from stronger oil prices. The growth path shows relative stability, with output estimated at 4.0 percent in 2025 and projected at 4.1 percent in 2026 and 4.3 percent in 2027. Inflation, while expected to ease, remains elevated, estimated at 23.0 percent in 2025, then declining to 16.0 percent in 2026 and 15.9 percent in 2027. External balances appear positive, with the current account surplus estimated at 5.1 percent of GDP in 2025, rising to 5.8 percent in 2026 before moderating to 3.1 percent in 2027. These revisions reflect a more complex global environment shaped by ongoing geopolitical conflicts, including the Iran crisis, the Russia-Ukraine War, and the Israel-Hamas War, which continue to disrupt energy markets, global supply chains, and shipping routes. For Nigeria, the situation translates into higher imported inflation and cost pressures for production and distribution, particularly in the non-oil sectors. While higher oil prices provide some fiscal and external relief due to higher revenue for government, the asymmetry between oil gains and broader cost pressures limits the transmission of growth, reinforcing structural weaknesses and dampening domestic demand. Policy response should prioritise protecting the domestic economy from external shocks while improving supply-side efficiency. This includes scaling up investments in energy infrastructure, transport logistics, and local input production to reduce import dependence and drive the growth of Nigeria’s productive sector.

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