…Forecasts Global Average Growth Rate Of 3.5%
The International Monetary Fund (IMF) has retained its 2026 economic growth forecast for Nigeria at 4.1% based on the country’s improving macroeconomic stability and favourable terms of trade despite a weakening global economy.
This is even as the Fund lowered its global growth forecast to 3% for 2026 and 3.4% for 2027, down from an average of 3.5% in 2024 and 2025.
The Washington D.C-based development finance institution, in its July 2026 World Economic Outlook (WEO) Update titled “Global Economy in Crosscurrents of War and Technology”, also retained its 2027 growth projection for Nigeria at 4.3 per cent, unchanged from its earlier forecast in April this year.
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It, however, warned that while Nigeria stood to benefit from higher crude oil prices, rising costs of essential goods are expected to worsen poverty and food insecurity, partly offsetting the gains from improved terms of trade.
Commenting on the report’s findings and its outlook for Sub-Saharan Africa (SSA), Division Chief in the IMF’s Research Department, Deniz Igan, said the findings had been clouded by the impact of the Middle East conflict after the region recorded broad-based growth in 2025.
The development finance expert said: “We had seen a broad-based pickup in growth in 2025 in the region. We had an acceleration of growth to 4.5 per cent. Now, the war obviously has clouded the outlook for 2026, and we are now projecting a softening of growth to 4.3 per cent in the region as a whole,” she said.
“This is beyond the cost of energy for the region. What matters also is the increase in fertiliser prices that we have seen, and this is coinciding with the planting season in some countries, and it may hurt the agricultural sector, in addition to all the other impacts of energy prices. The agricultural sector accounts for a large share of some sub-Saharan economies”, she added.
The IMF reported that the region’s overall growth projection masked significant differences across countries, reflecting variations in policy space, the pace of reform implementation and exposure to both geopolitical shocks and the rapidly evolving technology landscape.
The Division Chief in the IMF’s Research Department pointed out that oil-importing and non-resource-intensive economies were bearing the brunt of rising energy and food prices, while some larger economies continued to benefit from reforms implemented before the current global shocks.
She clarified: “Basically, what we are seeing is that the oil-importing, non-resource-intensive economies are more adversely affected by the higher energy and food prices, while some larger economies in the region are continuing to benefit from earlier stabilisation and reform efforts,” she said.
“Nigeria is expected to grow at 4.1 per cent, quite stable, and this is supported by improved macroeconomic stability and favourable terms of trade, with Nigeria being an oil exporter. At the same time, tighter prices mean there is some offset to that positive terms-of-trade effect because higher prices for essentials are expected to aggravate poverty and food insecurity”, Igan projected.
The IMF projected SSA’s economy to expand by 4.3 per cent in 2026, describing the outlook as broadly stable despite considerable divergence across countries.
The Bretton Woods development finance institution also projected South Africa’s economy to grow by 1.1 per cent, aided by stronger policy frameworks and ongoing structural reforms, while it predicted growth across the SSA to slow from 5.6 per cent in 2025 to 5.2 per cent this year and 2027.
Globally, the IMF forecasted that the world output would grow by three per cent in 2026 and 3.4 per cent in 2027, compared with an average growth rate of 3.5 per cent recorded in 2024 and 2025.
The Fund attributed the weaker outlook mainly to the economic impact of the prolonged U-S-Israeli-Iran war, particularly its disruptions to global energy supply chains.
Despite the impact of the Middle East war, it noted that stronger-than-expected productivity gains from the accelerating adoption of artificial intelligence (AI) were helping to cushion part of the slowdown.
It projected global headline inflation to increase from 4.1 per cent in 2025 to 4.7 per cent in 2026 before easing to 3.9 per cent in 2027, indicating that the disinflation trend that began in early 2024 has stalled.
The IMF also raised its average crude oil price projection to 89 dollars per barrel for 2026, about nine per cent above its April forecast, citing supply disruptions linked to the closure of the Strait of Hormuz as a reason for the projected rise.
