IMF Upgrades Nigeria’s Economic Growth Outlook
The International Monetary Fund (IMF) has raised its economic growth forecast for Nigeria in 2025 to 3.9 percent, marking an increase of 0.5 percentage points from its earlier projection. This upward revision was made during the presentation of the World Economic Outlook report at the recent World Bank/IMF Annual Meetings in Washington, D.C. The fund acknowledged the positive impact of the Central Bank of Nigeria (CBN)-led economic reforms on the country’s performance.
Several factors have contributed to this improved outlook, including a declining inflation rate, naira stability, rising foreign reserves, and other supportive domestic conditions. These outcomes are attributed to the exchange rate reforms and policies that encourage foreign investment.
Key Factors Behind the Growth Revision
The CBN Governor, Olayemi Cardoso, highlighted that strategic efforts by both monetary and fiscal authorities have created strong economic buffers, leading to the IMF’s two-year upward growth revision for Nigeria. He emphasized that the naira has become a competitive currency, with the economy witnessing positive trade balances and an increasing trend of businesses shifting from imports to exports of locally produced goods.
Cardoso also downplayed the impact of trade tariffs on the Nigerian economy. He stated that the country had implemented necessary measures early on, creating resilience against potential shocks. He noted that oil, the only commodity exposed to trade tariffs, experienced a relatively modest impact. The governor added that the economy is undergoing a complete restructuring, encouraging domestic production while discouraging imports.
IMF’s Perspective on Nigeria’s Economic Outlook
In its October 2025 World Economic Outlook (WEO) report, the IMF provided a positive growth forecast for Nigeria, predicting 3.9 percent growth in 2025 and 4.1 percent in 2026. The Economic Counsellor, Pierre-Olivier Gourinchas, cited several improving macroeconomic indicators and supportive domestic factors as the basis for this outlook.
He pointed to improved oil production, rising investor confidence, a supportive fiscal stance, and limited exposure to higher US tariffs as key drivers of the growth revision. Additionally, the stability in the exchange rate, rising foreign reserves, and GDP rebasing were identified as significant factors expected to propel the Nigerian economy forward in 2026.
Global Economic Trends and Challenges
While Nigeria’s growth outlook is positive, many other economies face downward revisions due to changes in international trade and official aid landscapes. Gourinchas noted that the weakening of the dollar by 10 to 12 percent has helped financial conditions in many emerging market economies, particularly those with dollar-denominated debt. Local currency recovery and lower inflation figures have also been supported by the weaker dollar.
IMF Deputy Director Petya Koeva Brooks highlighted that low-income countries in sub-Saharan Africa benefited from preferential access to the US market under the African Growth and Opportunity Act, which expired in September. She explained that growth in the region is expected to remain subdued, with projections of 4.1 percent in 2025 and 4.4 percent in 2026.
Global Economic Projections
According to the WEO report, the global economy is adjusting to a landscape reshaped by new policy measures. It projects global economic growth to slow from 3.3 percent in 2024 to 3.2 percent in 2025 and 3.1 percent in 2026. Advanced economies are expected to grow around 1.5 percent, while emerging market and developing economies are projected to grow just above four percent.
The report also mentioned that some extremes of higher tariffs have been tempered due to subsequent deals and resets. However, the overall environment remains volatile, with temporary factors supporting activity in the first half of 2025 fading. Inflation is projected to continue declining globally, though with variations across countries.
Policy Recommendations
The IMF emphasized the importance of pairing trade diplomacy with macroeconomic adjustment, rebuilding fiscal buffers, preserving central bank independence, and redoubling efforts on structural reforms. It warned that tactics such as trade diversion and rerouting, while providing short-term resilience, are costly and could restrain long-term growth.
Nigeria’s Economic Position
Just yesterday, the National Bureau of Statistics (NBS) released the September inflation report, indicating a slight reduction in food prices compared to August 2025. The headline inflation rate eased to 18.02 percent from 20.12 percent in August. While many Nigerians noticed the drop in food prices, they emphasized the need to improve purchasing power amid ongoing economic headwinds.
Cardoso, speaking at the Lagos Business School leadership programme, reflected on the challenges he faced when assuming office in 2023. He described a period of spiraling inflation, strained external reserves, shaken investor confidence, and pressure on all macroeconomic indicators. He stressed the need for decisive action rooted in courage, credibility, and accountability.
Steps Taken to Control Inflation
To rein in inflation, the CBN tightened policy aggressively, raising rates by more than 800 basis points and strengthening liquidity management. The bank restored orthodoxy by halting central bank financing of the government beyond statutory limits and re-anchoring monetary policy on its core mandate.
On foreign exchange, the CBN introduced a willing-buyer, willing-seller framework, unified exchange rate windows, and cleared the backlog of verifiable FX commitments, restoring market confidence. It also strengthened reserves, now standing above $42 billion, and created new channels for diaspora remittances and investments.
For Nigeria, Real GDP expanded by 4.2 percent in the second quarter of 2025, signaling a resurgence in growth momentum. Capital flows are rebounding, sovereign credit ratings have improved, and the naira is beginning to stabilize. Together, these shifts suggest more than a cyclical adjustment: they mark the outlines of a developmental inflection point, where investor confidence is gradually restored and Nigeria positions itself, two years on, at the threshold of structural renewal and long-term transformation.
