The World Bank has forecasted a 3.6% economic growth rate for Nigeria in 2025, a more optimistic outlook than the International Monetary Fund’s (IMF) revised estimate of 3.0%. This projection, featured in the Spring 2025 edition of Africa’s Pulse, highlights the World Bank’s confidence in the country’s ongoing economic reforms and improving macroeconomic conditions.
According to the World Bank, the projected growth will be largely fueled by a strong performance in the non-oil sectors—particularly telecommunications, financial services, and technology—as well as easing inflation and an overall improvement in business sentiment.
Growth is expected to accelerate further to 3.8% by 2027, assuming the continuation of policy reforms.
“Nigeria’s moderate but steady growth trajectory is underpinned by the recovery in service-oriented sectors and an anticipated increase in oil production aligning with OPEC+ quotas,” the report stated.
Divergent Inflation Outlooks
One key area of divergence between the World Bank and IMF is inflation. While the World Bank expects inflation to decline to 22.1% in 2025 from 26.6% in 2024, dropping further to 15.9% by 2027, the IMF projects a much higher average inflation rate of 26.5% in 2025 and a spike to 37.0% in 2026.
The difference in forecasts stems partly from the rebasing of Nigeria’s Consumer Price Index (CPI) in early 2025 by the National Bureau of Statistics. The World Bank believes this, along with tighter monetary policies, will help rein in inflation, while the IMF points to structural inefficiencies and currency volatility as ongoing risks.
Despite a brief dip in inflation early in the year, driven by the CPI rebasing, price pressures remain elevated—particularly in food.
Naira’s Volatility and Foreign Exchange Reform
The World Bank report identified Nigeria’s currency, the naira, as one of the weakest in Africa in 2024, having lost over 40% of its value. This sharp depreciation was attributed to exchange rate unification and liberalization policies introduced to improve forex market transparency.
While the reforms caused short-term volatility, they also improved foreign exchange liquidity and laid the groundwork for a more predictable economic environment.
External Balances and Oil Revenue Concerns
On the external front, the World Bank anticipates Nigeria’s current account surplus will edge up from 9.2% of GDP in 2024 to 9.4% in 2026, supported by lower import demand, rising remittances, and stronger oil export earnings. This contrasts with the IMF’s forecast of a declining surplus, projecting 6.9% in 2025 and 5.2% by 2026, largely due to risks surrounding global oil prices.
Investment bank JP Morgan has warned that a sustained drop in oil prices below Nigeria’s fiscal breakeven of $60 per barrel could reverse the surplus, while Fitch Ratings offered a more moderate outlook, expecting an average surplus of 3.3% over the next two years.
In 2024, Nigeria recorded a Balance of Payments surplus of $6.83 billion—its first in three years—driven by a goods trade surplus exceeding $13 billion, according to data from the Central Bank of Nigeria.
Return to Global Debt Markets
Nigeria re-entered the Eurobond market in late 2024, raising $2.2 billion at a 10.0% yield. This marked a sharp rise from previous rates and reflected heightened global risk and investor caution. Nonetheless, the issuance underscored growing investor interest following Nigeria’s economic reforms, despite the rising cost of borrowing.
Reform Momentum Welcomed, But Challenges Remain
Both the World Bank and IMF have acknowledged Nigeria’s recent macroeconomic adjustments, including the elimination of fuel subsidies, the end of central bank deficit financing, and the shift to a single exchange rate.
These reforms have been welcomed as necessary steps toward long-term economic stability. However, the IMF remains wary of persistent inflation and low per capita income growth, warning that broader economic gains may not immediately translate into improved living standards for the average Nigerian.
The IMF forecasts that real per capita income will increase by just 0.6% in 2025—suggesting that while the economy may be growing, its benefits might not yet be felt by most citizens.
