The International Monetary Fund (IMF) has downgraded its growth projection for Nigeria in 2025 to 3.0 percent, a modest outlook that falls short of the Federal Government’s 4.6 percent estimate in the 2025 budget.
The revision, released Tuesday in the IMF’s latest World Economic Outlook, trims 0.2 percentage points off its earlier October 2024 forecast of 3.2 percent, citing weaker oil prices and lingering structural challenges.
The report, which examines global and regional economic trends, also sees Nigeria’s growth slowing further to 2.7 percent in 2026—a trajectory that casts doubt on the sustainability of the country’s ongoing economic recovery despite recent policy overhauls.
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The Fund’s projection is at odds with figures released by Nigeria’s National Bureau of Statistics (NBS), which reported that the country’s economy grew by 3.84 percent in real terms in Q4 2024. That figure marked a noticeable uptick from both Q3 2024 and the same quarter a year earlier. The NBS attributed this acceleration to a modest rebound in the non-oil sector, improved agricultural output, and stronger performance in services.
Still, the IMF’s caution stems from broader vulnerabilities—chief among them inflation, unemployment, and a deepening food crisis.
Reforms Recognized, But Their Impact Remains Uneven
In its separate staff report following a recent visit to Nigeria, the IMF Mission led by Axel Schimmelpfennig acknowledged that President Bola Tinubu’s administration has taken “important steps” to correct years of macroeconomic instability. Among the reforms lauded were the scrapping of fuel subsidies, a liberalized foreign exchange regime, and halting the Central Bank of Nigeria’s deficit financing for the federal government—measures aimed at restoring fiscal and monetary discipline.
But while these policies have earned praise from international institutions, they have yet to deliver tangible benefits to most Nigerians.
“Gains have yet to benefit all Nigerians as poverty and food insecurity remain high,” the IMF cautioned, flagging the risk that prolonged hardship could undermine public support for the reforms and slow down implementation.
In March 2025, inflation climbed to 24.23 percent—driven largely by food and transport costs. Although the CBN has taken an increasingly hawkish stance, raising interest rates and tightening liquidity to combat inflation, the Fund warned that price pressures remain deeply embedded, especially in the context of widespread poverty and weak purchasing power.
A Regional Standout, But Not Out of the Woods
Nigeria’s 3.0 percent forecast puts it ahead of regional rivals like South Africa, which is expected to grow just 1.0 percent in 2025 and 1.3 percent in 2026. The average growth for sub-Saharan Africa is pegged at 3.8 percent in 2025 and 4.2 percent in 2026.
Still, Nigeria’s position isn’t secure. The IMF noted that the country’s outlook was downgraded due to softening oil revenues, a critical source of foreign exchange, and unresolved fiscal imbalances.
“Among the larger economies, the growth forecast in Nigeria is revised downward by 0.2 percentage point for 2025 and 0.3 percentage point for 2026, owing to lower oil prices,” the report noted.
Across emerging markets, countries in Asia are expected to grow at an average of 4.5 percent in 2025, while the United States is forecast to grow at 1.8 percent, and advanced economies more broadly at 1.4 percent.
CBN Commended for Data-Driven Approach
The IMF expressed support for the Central Bank of Nigeria’s new leadership and its “data-dependent” approach to monetary policy. The Fund described the strategy as appropriate for navigating Nigeria’s complex inflation dynamics and external vulnerabilities.
Since assuming office, the CBN governor, Yemi Cardoso, has moved to restore investor confidence and credibility, raising the benchmark interest rate several times. However, with inflation continuing to bite, especially for food and transport, households remain under pressure.
For the Tinubu administration, the challenge lies in converting technical reforms into meaningful gains for Nigerians. The disconnect between macroeconomic indicators and lived realities continues to haunt policy credibility.
While the reforms may have won Abuja some applause abroad, the true test remains at home—where millions are still waiting for the promises of economic recovery to translate into affordable food, jobs, and stability.