Nigeria holds steady, South Africa improves as growth slows across Sub-Saharan Africa

Africa’s two biggest economies are expected to remain on relatively firmer footing this year as growth slows across the rest of sub-Saharan Africa (SSA), according to the International Monetary Fund’s latest World Economic Outlook.

Nigeria’s economy is projected to grow to 4.1 percent in 2026, unchanged from the IMF’s April forecast, before accelerating to 4.3 percent in 2027. South Africa’s growth forecast was revised up by 0.1 percentage point to 1.1 percent, although the economy is expected to expand faster at 1.3 percent in 2027.

The July report released on Wednesday noted that SSA’s economy is expected to grow to 4.3 percent, broadly unchanged from earlier projections. However, the regional headline conceals widening differences among countries, with growth in the rest of the region expected to slow to 5.2 percent in 2026 and 2027 from 5.6 percent in 2025.

“While growth in Sub-Saharan Africa is expected to remain broadly stable, this masks substantial divergence across countries,” the report said, citing differences in policy space, reform implementation and exposure to external shocks.

Nigeria’s outlook is being supported by improved macroeconomic stability and favourable terms of trade, the Fund said. But it warned that higher prices for essential goods could worsen poverty and food insecurity, underscoring the fragile nature of the country’s recovery.

South Africa’s outlook is expected to remain stable in the near term and improve gradually as stronger policy frameworks and structural reforms support activity. Yet, at 1.1 percent, the country’s projected growth rate remains well below the regional average.

The IMF said oil-importing and non-resource-intensive economies are likely to face the greatest pressure from higher energy and food prices. Many are also poorly positioned to benefit from the global technology upswing driven by artificial intelligence and are facing weaker official development assistance.

But some larger African economies are benefiting from earlier stabilisation efforts and, in some cases, stronger terms of trade. Still, the region remains largely excluded from the AI-driven technology cycle that is lifting activity in more advanced economies and technology-linked emerging markets.

Globally, the multilateral lender expects growth to slow to 3.0 percent from an average of 3.5 percent in 2024 and 2025, before recovering to 3.4 percent next year. The Fund said the drag from the Middle East conflict is being partly offset by stronger technology investment and the wider adoption of artificial intelligence.

Energy exporters outside the conflict zone are benefiting from higher prices, while economies integrated into the technology value chain are seeing stronger activity. But energy importers with limited exposure to the technology sector, including many low-income countries, are expected to face weaker growth and renewed inflation pressures.

Global inflation is projected to rise to 4.7 percent from 4.1 percent in 2025 before easing to 3.9 percent in 2027. The IMF said the disinflation trend that began in early 2024 has stalled, while risks remain tilted to the downside.

Petya Brooks, deputy director of the IMF’s research department, said a renewed escalation in the Middle East could reignite commodity-price volatility, tighten financial conditions and worsen food insecurity in low-income countries.

“There’s still a lot of uncertainty,” Brooks said. “A renewed escalation in the conflict could reignite commodity price volatility, tighten financial conditions, strain policy buffers, and worsen food insecurity in low-income countries.”

The Fund also warned that a correction in technology-driven market expectations, deeper trade fragmentation and depleted policy buffers could further weaken the global outlook. It added that governments should prioritise price stability, rebuild fiscal buffers and pursue structural reforms that improve energy security, technology readiness and long-term growth.