The International Monetary Fund (IMF) has raised Nigeria’s economic growth forecast for 2025 to 3.4%, signaling renewed confidence in Africa’s largest economy despite domestic macroeconomic headwinds and a shifting global trade landscape.
The upgrade, contained in the IMF’s July 2025 World Economic Outlook (WEO) Update, marks a 0.4 percentage point increase from its April projection of 3.0%. The Fund maintained this projection through 2025, with expectations for a slight moderation to 3.2% in 2026, still 0.5 points higher than previously anticipated.
This improvement reflects broader optimism about the global economy, which the IMF says is benefiting from “stronger-than-expected front-loading in anticipation of higher tariffs,” alongside more favorable financial conditions, including a weaker US dollar and expanded fiscal support in major economies.
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“Global growth is projected at 3.0% for 2025 and 3.1% in 2026,” the IMF stated. “The forecast for 2025 is 0.2 percentage point higher than that in the April 2025 WEO. This reflects lower-than-expected effective US tariff rates and continued resilience in trade and investment.”
Nigeria’s Growth Outpaces South Africa but Lags Behind Regional Average
With this upward revision, Nigeria now ranks ahead of South Africa, whose growth remains sluggish at a projected 1.0% for 2025 and 1.3% in 2026. However, Nigeria still falls short of the Sub-Saharan Africa regional average, which the IMF now expects to grow by 4.0% in 2025 and 4.3% in 2026.
The Fund’s optimism aligns with recent domestic data. According to the National Bureau of Statistics (NBS), Nigeria’s Gross Domestic Product (GDP) grew by 3.13% in Q1 2025, a notable improvement from the 2.27% posted in Q1 2024. The growth was driven largely by the services and industrial sectors, and also reflects improvements in oil production and real estate activity.
In nominal terms, the country’s GDP jumped from N79.5 trillion in Q1 2024 to N94.05 trillion in Q1 2025, marking an 18.3% year-on-year increase. This growth follows the recent rebasing of Nigeria’s national accounts to a 2019 base year—up from the outdated 2010 base—which experts say offers a more realistic picture of the economy’s evolving structure.
Short-Term Trade Surge May Not Last
While the IMF’s revision is encouraging, the Fund cautioned that some of the recent global momentum—particularly the uptick in trade and investment—is temporary. The boost is largely attributed to companies front-loading trade in anticipation of new tariffs expected to hit global commerce in 2026.
“There is risk of a payback in 2026,” the report warned. “Much of the trade expansion this year is driven by short-term moves, not sustained structural gains.”
This warning is significant for Nigeria, which relies heavily on imports and has struggled with supply chain challenges, currency volatility, and inflationary pressures.
The IMF’s latest forecast comes as President Bola Tinubu’s government grapples with inflation, subsidy reforms, and a volatile naira. But despite criticism of the administration’s pace of economic reform, the IMF appears to acknowledge some positive impact from recent policy moves—such as the unification of exchange rates and partial subsidy removal—on investor sentiment and macroeconomic stability.
However, the gains remain fragile. Experts warn that inflation, which remains stubbornly high, and the weak purchasing power of Nigerians could dampen household consumption and slow recovery in the non-oil sector.
Global Context: Trade Rebalancing and Inflation Moderation
The Fund projects global economic growth to hit 3.0% in 2025—up 0.2 points from its April estimate—before edging slightly higher to 3.1% in 2026. Much of the improvement comes from lower average US tariff rates and stronger-than-expected financial conditions. Headline inflation globally is expected to fall to 4.2% in 2025 and 3.6% in 2026.
Even so, global inflation remains above target in key economies, such as the US, while other large jurisdictions are experiencing more subdued price pressures.