ECONOMIC OUTLOOK: Nigeria's Financial Prospects Dim as IMF Downgrades Projection to 4.1% Expansion

The International Monetary Fund has reduced its forecast for Nigeria's economic growth to 4.1 percent in 2026, citing higher fuel and fertilizer prices as well as increased shipping costs, all of which have been triggered by the ongoing Middle East crisis, according to the IMF's World Economic Outlook for April 2026.

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This revised forecast represents a 0.3 percentage point decrease from the 4.4 percent growth rate that the IMF had previously projected in January, and it reflects the mounting global uncertainties and external shocks caused by the crisis.

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The report, which was released on the sidelines of the IMF/World Bank 2026 Spring Meetings in Washington DC, indicates that Nigeria's growth projection will still experience moderate expansion, but the rising costs of goods, transportation, and imported inputs may negatively impact output.

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The IMF has also lowered its global growth forecast, predicting that the world's output will slow to 3.1 percent in 2026, down from 3.4 percent in 2025, as the war-induced disruptions affect economic momentum across various regions.

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Economic Counsellor and Director of the Research Department at the IMF, Pierre-Olivier Gourinchas, noted that sub-Saharan Africa has seen a downgrade in growth projections, which is compounded by the impact of the war and the cutting of aids to the region.

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Gourinchas stated that the region is experiencing a broad downgrade in growth and rising inflation, with the impact largely in line with global trends, although the situation varies for energy importers and exporters.

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Division Chief of the Research Department at the IMF, Deniz Igan, explained that Nigeria's growth has been revised down by 0.3 percentage points to 4.1 percent in 2026, reflecting the negative impact of higher fuel and fertilizer prices and increased shipping costs on non-oil activity.

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Igan noted that while higher oil prices provide some offset, the overall balance is negative for growth in 2026, with some recovery expected in 2027, and that maintaining tight monetary policy and closely monitoring exchange rate movements and inflation expectations will be crucial to achieving the inflation target.

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Despite the gains from current high oil prices triggered by the war in the Middle East, Nigeria's growth projections have been revised downwards by 0.3 percent to 4.1 percent in 2026, according to the International Monetary Fund.

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Igan stated that 2025 was a relatively strong year for sub-Saharan Africa, with global growth being resilient, oil prices strong, and external financial conditions supportive, but the war has since slowed global growth, softened non-oil commodity prices, and worsened terms of trade for oil importers.

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The region is facing significant headwinds from declining foreign aid, with bilateral aid cuts ranging from 16 percent to 28 percent in 2025, and this trend is expected to continue, according to Igan.

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Growth in sub-Saharan Africa has been downgraded by 0.4 percentage points cumulatively for 2026 and 2027, and median inflation is projected to rise from 3.4 percent in 2025 to 5 percent, reflecting high oil and fertilizer prices, potential fuel shortages, and rising borrowing costs.

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Fertilizer prices are a particular concern for the region due to its dependence on agriculture and existing food insecurity, according to the IMF's report.