Nigeria’s Economy Expected to Expand Steadily Through 2027
The World Bank has projected that Nigeria’s economy will grow by 3.6% in 2025, following an estimated growth of 3.4% in 2024. This outlook was detailed in the Spring 2025 edition of Africa’s Pulse and reflects signs of improvement due to ongoing economic reforms.
This forecast is more optimistic than the one released by the International Monetary Fund (IMF), which revised Nigeria’s 2025 growth projection downward to 3.0% in its April 2025 World Economic Outlook. The IMF also anticipates slower growth of 2.7% in 2026, citing concerns over lower oil revenues and structural challenges.
Non-Oil Sectors Drive Growth
According to the World Bank, Nigeria’s growth is increasingly supported by performance in non-oil sectors, particularly financial services, telecommunications, and IT. The report notes that better business sentiment and easing inflation are helping economic stability.
With consistent reforms, growth is expected to rise further to 3.8% by 2027. The World Bank stated that Nigeria’s economic recovery is gradual but steady, driven largely by services and a rebound in oil production aligning with OPEC+ quotas.
Inflation Forecasts Differ
The World Bank expects inflation to drop to 22.1% in 2025, and further to 15.9% by 2027. These figures follow the National Bureau of Statistics’ (NBS) rebasing of the Consumer Price Index in January 2025. In contrast, the IMF projects average inflation of 26.5% in 2025 and a sharp rise to 37.0% in 2026 due to exchange rate effects and structural inefficiencies.
Though inflation briefly fell from 34.8% in December 2024 to 24.48% in January 2025, it slightly rose again to 24.23% in March, primarily due to food price increases.
Exchange Rate Reforms and the Naira
The World Bank also highlighted the Naira’s significant depreciation—over 40% in 2024—making it one of Africa’s weakest currencies that year. The decline was attributed to reforms unifying Nigeria’s foreign exchange windows. The government’s push for a market-driven exchange rate has since improved currency liquidity and reduced volatility, aiding macroeconomic predictability.
External Accounts and Reform Impact
The World Bank estimates that Nigeria’s current account surplus will rise slightly from 9.2% of GDP in 2024 to 9.4% in 2026, supported by higher remittances, reduced imports, and better oil exports. On the other hand, the IMF expects a narrower surplus—6.9% in 2025 and 5.2% in 2026—due to potential risks related to global oil prices and external demand.
Both the World Bank and IMF recognized the Nigerian government’s reform efforts, such as ending fuel subsidies, halting central bank deficit financing, and unifying exchange rates. These steps are seen as essential for fiscal stability and improving investor confidence.
Cautious Optimism from IMF
Despite reform progress, the IMF remains cautious. It warns that inflation remains high and real per capita income is barely improving, with only a 0.6% increase projected for 2025. This suggests that economic gains may not yet translate into improved living standards for most Nigerians.