Fund retains Nigeria’s 4.1% growth forecast for 2026 but cautions that higher food and energy costs could worsen hardship despite macroeconomic gains

The International Monetary Fund has warned that rising prices of essential goods could push more Nigerians into poverty and worsen food insecurity, even as the country’s macroeconomic stability improves and economic growth gathers pace.

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In its July 2026 World Economic Outlook Update, the IMF retained Nigeria’s economic growth forecast at 4.1 per cent for 2026 and projected a stronger 4.3 per cent expansion in 2027, but cautioned that persistent increases in the cost of food, energy and other basic necessities could erode the benefits of ongoing reforms.

“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 Fund said.

The assessment presents a balanced picture of Nigeria’s economy, acknowledging progress made through recent fiscal and monetary reforms while highlighting the continuing pressure on household incomes.

The IMF said countries across sub-Saharan Africa are expected to record broadly stable growth of 4.3 per cent in 2026, although outcomes will differ depending on policy implementation, exposure to external shocks and structural reforms.

According to the report, some of Africa’s larger economies, including Nigeria, have benefited from earlier stabilisation measures.

However, many countries continue to face weaker development financing and have yet to benefit significantly from the global productivity gains associated with artificial intelligence.

Globally, the Fund forecasts economic growth of 3.0 per cent in 2026 and 3.4 per cent in 2027, below the average recorded in 2024 and 2025.

It attributed the slowdown largely to the economic consequences of continuing conflict in the Middle East, although investment in artificial intelligence is expected to provide some support to global activity.

The report also warned that inflationary pressures have intensified as energy prices continue to climb.

Global headline inflation is projected to rise from 4.1 per cent in 2025 to 4.7 per cent in 2026 before easing to 3.9 per cent in 2027, prompting the Fund to conclude that the disinflation trend seen since early 2024 has stalled.

The IMF projected that crude oil prices would increase by 32 per cent in 2026 compared with 2025 levels, while natural gas prices would rise by 22 per cent.

Fertiliser prices are expected to climb 26 per cent, contributing to an estimated eight per cent increase in global food prices.

The Fund warned that prolonged disruptions in energy and fertiliser markets could significantly worsen food insecurity, particularly in low-income countries where smallholder farmers already face rising production costs.

“Food insecurity could worsen materially if disruptions in fertilizer and energy markets intensify or linger, especially in low-income countries in South Asia and sub-Saharan Africa,” the report stated.

Rather than introducing broad fuel subsidies or price controls, the IMF urged governments to adopt targeted support measures for vulnerable households while maintaining macroeconomic discipline.

“Fiscal policy should avoid broad-based subsidies, tax cuts, and price controls, which are typically poorly targeted, fiscally costly, and politically difficult to unwind,” the Fund advised.

It added that any government assistance should be temporary, carefully targeted and accompanied by policies that restore price stability, strengthen tax administration, improve public spending efficiency and expand social protection without undermining debt sustainability.

The latest assessment comes as Nigeria continues to grapple with stubborn inflation despite signs of economic recovery.

According to the National Bureau of Statistics, headline inflation accelerated to 15.93 per cent in May 2026, marking the third consecutive monthly increase after easing earlier in the year.

Economists have attributed the renewed inflationary pressure to geopolitical tensions, higher energy costs, insecurity affecting food production and persistent import bottlenecks.

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The IMF’s latest outlook suggests that while Nigeria’s reform programme is beginning to strengthen macroeconomic fundamentals, ensuring that ordinary households benefit from that progress will remain one of the country’s most critical policy challenges in the coming years.