From Victor Osula, Abuja
The Nigerian economy is expected to strengthen to an average of 3.6% between 2025 and 2026, the World Bank has projected.
The bank, in its Global Economic Prospects January 2025 report, released on Thursday, said following monetary policy tightening in 2024, Nigeria’s inflation is expected to gradually decline, boosting consumption and supporting growth in the services sector, which continues to be the main driver of growth.
While Oil production is expected to increase over the forecast period, the report emphasised that production will remain below the OPEC quota and per capita income growth will remain weak
“Growth in Nigeria is forecast to strengthen to an average of 3.6 percent a year in 2025-26. Following monetary policy tightening in 2024, inflation is projected to gradually decline, boosting consumption and supporting growth in the services sector, which continues to be the main driver of growth. Oil production is expected to increase over the forecast period but remains below the OPEC quota. The baseline forecast implies that per capita income growth will remain weak”, the bank projected.
The report emphasised that the 3.3% Gross Domestic Product (GDP), growth in Nigeria in 2024, was mainly driven by services sector activity, particularly in financial and telecommunication services.
“Macroeconomic and fiscal reforms helped improve business confidence. In response to rising inflation and a weak naira, the central bank tightened monetary policy.
“Meanwhile, the fiscal deficit narrowed due to a surge in revenues driven by the elimination of the implicit foreign exchange subsidy, following the unification of the exchange rate and improved revenue administration”, it added.
Overall, Growth in Sub-Saharan Africa (SSA), is projected to strengthen to an average of 4.2 percent in 2025-26, driven primarily by improvements in the outlook for industrial-commodity-exporting countries, including the region’s largest economies.
“However, high government debt and elevated interest rates have narrowed fiscal space, prompting fiscal consolidation efforts in many countries, while financing needs remain high. Despite the projected pickup in growth, per capita income gains will remain inadequate to make significant progress in reducing extreme poverty in the region.
“Risks to the outlook remain tilted to the downside. These risks include weaker global growth due to heightened uncertainty and the potential for adverse changes in trade policies; a sharper-than-expected slowdown in China; increased regional or global instability, such as an escalation of conflicts in Sudan and in the Middle East, which could drive up energy and food price inflation in the region; increased risk of government distress amid a possibility of higher-for-longer global interest rates; and greater frequency and intensity of adverse weather events.”
