IMF projects Nigeria’s economic growth at 3.1%
According to the IMF World Economic Outlook (WEO) for January 2025, Nigeria’s economic growth forecast was revised upward by 0.1 percentage point, from 3.1% in the October 2024 report to 3.2% in the January 2025 report. However, the forecast for 2026 was downgraded by 0.2 percentage point to 3.0%.
Key factors driving this downward projection include the anticipated decline in external financing for many Sub-Saharan African countries, the depreciation of the Naira against the dollar, and tighter global financing conditions, which will exacerbate debt burdens for developing countries including, Nigeria.
For Sub-Saharan Africa as a whole, the IMF projects economic growth of 4.2% in 2025, a 0.4 percentage point increase from the 3.8% recorded in 2024. Inflation is also expected to decline, reaching 4.2% in 2025 and 3.5% in 2026. Nigeria’s GDP forecast is 1.1 percentage points below the Sub-Saharan African countries average. While the projected growth rate is positive, it is too low to significantly boost per capita income.
The moderate growth projection is likely to be undermined by long-term risks, particularly the unpredictable nature of the exchange rate, which deters investment decisions. Additionally, Nigeria’s public finances remain vulnerable if borrowing costs stay high and revenue generation remains weak. Therefore, the government must carefully manage inflation and strengthen tax administration processes to enhance domestic revenue collection.
