IMF increases Nigeria’s growth forecasts to 4.2%, warns higher prices will aggravate poverty, food insecurity

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The International Monetary Fund (IMF) has raised Nigeria’s economic growth forecast for 2026 to 4.2 per cent, even as it warned that higher prices for essentials will aggravate poverty and food insecurity.

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The projections are contained in the IMF’s 2026 World Economic Outlook titled “Resilience Under Strain, Urgent Choices,” presented on the sidelines of the IMF/World Bank meetings holding in Bangkok, Thailand.

The Bretton Woods institution said that the projections are a reflection of the nation’s macroeconomic stability, even as it warned that sky-high prices are expected to push more Nigerians into poverty.

Nigeria has introduced a series of reforms the government said were focused on fixing the structure of the economy, although the impact has been enormous for many Nigerians grappling with the cost-of-living crisis.

The government introduced reforms in the foreign exchange market, just as it abolished what it termed a wasteful, corruption-ridden subsidy regime amid fiscal pressures.

While the reforms have been hailed as positive for the nation’s fiscal health by global development and financial institutions, many Nigerians have expressed frustrations over their impact on the domestic front amid increased energy prices, high cost of living and sundry inflationary pressures.

“Nigeria is supported by improved macroeconomic stability and favourable terms-of-trade effects, though higher prices for essentials are expected to further aggravate poverty and food insecurity,” the IMF said in its report Tuesday.

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The global institution also put Nigeria’s growth forecast for 2027 at 4.3 per cent.

Sub-Saharan Africa

The report added that growth in sub-Saharan Africa is expected to remain stable at 4.5 per cent in 2026, though this masks substantial divergence across countries, reflecting differences in policy space, reform implementation, commodity exposure, climate shocks, and access to external financing.

READ ALSO: Targeted support, not subsidies, can best protect people when inflation surges – IMF

“Oil-importing, non-resource-intensive economies are more adversely affected by higher energy and food prices, whereas some larger economies continue to benefit from earlier stabilisation and reform efforts, even though they are largely absent from the AI-driven global technology upswing and face headwinds from declines in official development assistance,” it said.

South Africa’s growth outlook is expected to remain stable in the near term and improve gradually over the medium term, underpinned by strengthened policy frameworks and ongoing structural reforms.

“Growth in the rest of the region is expected to slow from 5.6 per cent in 2025 to 5.5 per cent in 2026 and 5.3 per cent in 2027,” the report said.