IMF says Nigeria’s growth outlook holds, but poverty risks mount

Nigeria’s improving macroeconomic stability and favourable terms-of-trade effects continue to support the national growth outlook, according to the International Monetary Fund (IMF). However, the Fund cautions that rising prices for essential goods are expected to deepen poverty and food insecurity across Africa’s largest economy.

 

“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 noted in its July 2026 World Economic Outlook Update. This assessment accompanies an unchanged growth forecast of 4.1 per cent for 2026 and 4.3 per cent for 2027—projections consistent with the Fund’s April outlook.

 

External shocks and commodity volatility

The favourable terms-of-trade effects identified by the IMF are largely linked to the conflict in the Middle East, which has driven global oil prices upward. The Fund’s baseline assumes an average petroleum spot price of $89 per barrel in 2026, representing a 32 per cent increase over 2025. While this dynamic benefits net energy exporters like Nigeria, it simultaneously exerts significant pressure on oil-importing economies across the continent.

 

These same inflationary forces are placing substantial strain on Nigerian households. The report projects that global fertilizer prices will rise by 26 per cent and food prices by 8 per cent in 2026, compounded by higher energy and transport costs. For a nation where food accounts for a significant share of household expenditure, the combination of oil-driven macroeconomic stability and imported inflation on essential goods remains a critical policy challenge.

Regional divergence and social risks

Nigeria’s trajectory reflects a broader regional pattern described by the Fund as stable on the surface but uneven in practice. Sub-Saharan Africa is projected to grow by 4.3 per cent in 2026, yet the IMF notes that this figure “masks substantial divergence across countries, reflecting differences in policy space, reform implementation, and exposure to external shocks”.

 

The Fund further highlighted that rising food and energy costs “could heighten the risk of social unrest and domestic political instability, especially in vulnerable economies in sub-Saharan Africa or in countries with upcoming elections”.

To mitigate these risks, the IMF has urged governments to move away from broad fuel subsidies and toward temporary, targeted support for the most vulnerable populations while prioritising the rebuilding of fiscal buffers.