Inflation rebasing, structural bottlenecks, and global oil shocks expected to derail Nigeria’s recovery—IMF warns in April 2025 Outlook.
By IDNN Business Desk | April 23, 2025
[ABUJA] — Nigeria’s inflation is expected to surge dramatically to 37.0% in 2026, the International Monetary Fund (IMF) has projected in its April 2025 World Economic Outlook, citing structural rigidities and persistent price pressures as key drivers.
The new inflation estimate follows the rebasing of Nigeria’s Consumer Price Index (CPI) by the National Bureau of Statistics (NBS) in January 2025. The IMF emphasized that despite a temporary drop to 26.5% in 2025, inflationary momentum is set to rebound strongly next year, raising concerns about consumer welfare and economic stability.
> “The outlook reflects ongoing structural constraints in supply chains, monetary transmission lags, and high food prices,” the report noted.
Economists Dispute Pessimism
The forecast has sparked a sharp divide among Nigerian economists. While some acknowledge the pressures, others argue the IMF may be underestimating Nigeria’s reform efforts and over-projecting risks.
> “This projection feels detached from fiscal and monetary realities on ground,” said Dr. Ibrahim Fashola, a senior economist at the Lagos School of Economics. “It does not fully account for planned subsidy reforms and domestic production incentives.”
Growth Projections Also Trimmed
Beyond inflation, the IMF revised Nigeria’s 2025 GDP growth projection downward by 0.2 percentage point to 3.0%, from its earlier 3.2% forecast. The 2026 forecast was similarly slashed to 2.7%, reflecting downside risks from weakening global oil prices.
The Fund flagged oil-exporting Sub-Saharan countries like Nigeria as particularly vulnerable to commodity price volatility, with the report warning:
> “Nigeria’s fiscal and external balances remain exposed to global energy market fluctuations.”
Current Account to Shrink Despite 2024 Surplus
Nigeria’s external position, which was relatively robust in 2024 with a current account surplus of 9.1% of GDP, is also expected to deteriorate. The IMF projects a sharp decline to 6.9% in 2025, and 5.2% in 2026, as import pressures mount and capital inflows slow.
Data from the Central Bank of Nigeria showed a $6.83 billion balance of payments surplus in 2024, largely buoyed by a $13.17 billion trade surplus and modest recovery in foreign investments.
However, analysts caution that these gains may not be sustained:
> “If oil prices slide below $70 per barrel and portfolio flows remain sluggish, Nigeria’s external buffers could be tested,” said Bola Adedeji, head of research at Zenith Capital Markets.
Policy Implications
As inflation expectations rise and growth weakens, calls are mounting for a coordinated fiscal-monetary response to stabilize the economy. Analysts say the Central Bank must tighten its policy stance, while the government accelerates non-oil revenue diversification and exchange rate reforms. Description:
The IMF projects Nigeria’s inflation will spike to 37% in 2026, citing price pressures and weak oil prices. Growth forecasts cut, and external surplus expected to decline
