IMF lowers Nigeria’s 2026 growth outlook to 4.1% amid global pressures

THE International Monetary Fund (IMF) has revised Nigeria’s economic growth forecast for 2026 downward by 0.3 percentage points to 4.1 percent, from an earlier projection of 4.4 percent, citing intensifying domestic and global headwinds.

The downgrade was announced during a media briefing marking the release of the IMF’s April 2026 Global Financial Stability Report on Tuesday in Washington DC, the United States. Although the new estimate is below the January 2026 projection, it still comes in slightly above the outlook published in October 2025.

Providing context for the adjustment, Deputy Chief of the Macro-Financial Division in the IMF’s Research Department, Ms Deniz Igan, noted that the relatively strong performance recorded across Sub-Saharan Africa in 2025 is now under pressure due to fresh global shocks. She pointed to the ongoing geopolitical tensions, which have disrupted non-oil commodity markets and worsened trade conditions for oil-importing economies.

According to her, the conflict has weakened global growth, softened non-oil commodity prices, and deteriorated terms of trade for several countries in the region. She also highlighted a sharp drop in foreign aid, with bilateral support declining by between 16 percent and 28 percent in 2025, a trend expected to persist and further strain economies.

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For Nigeria, the IMF attributed the weaker outlook to rising input costs and mixed macroeconomic signals. Higher prices for fuel, fertiliser, and shipping are expected to weigh on non-oil sectors, even as elevated crude oil prices provide a partial buffer.

The Fund explained that the downward revision reflects a balance between these opposing forces, with cost pressures dampening broader economic activity while oil revenues offer some support.

On the monetary front, the IMF stressed the importance of maintaining tight policy conditions. It advised close monitoring of inflation dynamics, exchange rate movements, and expectations to sustain macroeconomic stability.

Nigeria’s inflation rate stood at approximately 15.06 percent year-on-year as of February 2026, while the benchmark interest rate remained elevated at 26.50 percent, underscoring the central bank’s continued efforts to rein in price pressures.

Despite the current slowdown, the IMF projects a modest recovery in 2027 as some of these pressures begin to ease.

Globally, the Fund expects economic growth to moderate, with world output projected to decline from 3.4 percent in 2025 to 3.1 percent in 2026, before edging up to 3.2 percent in 2027.

Growth across advanced economies is also forecast to soften slightly, easing from 1.9 percent in 2025 to 1.8 percent in 2026 and 1.7 percent in 2027. The United States is expected to remain relatively resilient with a 2.3 percent growth rate in 2026, while the United Kingdom is projected to expand by just 0.8 percent.

Germany, Europe’s largest economy, is forecast to recover gradually, moving from 0.2 percent growth in 2025 to 0.8 percent in 2026 and 1.2 percent in 2027.

Among major economies, India is set to maintain the strongest growth momentum at 6.5 percent in 2026, while weaker performances are expected in countries such as South Africa, which is projected to grow by only 1.0 percent.

READ ALSO: IMF: Oil price shock puts global economic resilience to the test

Across Sub-Saharan Africa, growth is expected to slow slightly from 4.5 percent in 2025 to 4.3 percent in 2026, before inching up to 4.4 percent in 2027, reflecting both external pressures and underlying structural constraints.

The IMF linked its revised projections to escalating tensions in the Middle East, particularly around the Strait of Hormuz, a critical global oil transit route. Disruptions in the region, including attacks on oil infrastructure, have driven up energy prices and heightened uncertainty in global markets.

These developments have led to higher shipping and insurance costs, strained supply chains, and increased prices for fuel and fertiliser. These factors disproportionately impact developing economies like Nigeria.

Consequently, import-dependent countries are facing deteriorating trade conditions, rising inflationary pressures, and slower growth, all of which are reflected in the IMF’s latest economic outlook.