IMF Raises Nigeria’s Economic Growth Forecast to 3.4% Amidst Cautious Optimism

The International Monetary Fund (IMF) has upgraded its economic growth forecast for Nigeria to 3.4% for 2025, signaling renewed confidence in the nation’s short-term prospects despite ongoing domestic and global challenges. The new projection, released in the IMF’s July 2025 World Economic Outlook (WEO) update, represents a significant upward revision of 0.4 percentage points from its previous 3.0% forecast in April.

The IMF’s decision reflects a combination of domestic and external factors. While the Fund’s report noted a broader improvement in the global outlook driven by favorable financial conditions and resilient trade, Nigerian economic analysts point to specific domestic drivers. Experts from FBNQuest Merchant Bank believe the upward revision is likely due to an observed improvement in the country’s oil production and the continued strong performance of the services sector. The expected full-scale operation of a new domestic refinery is also seen as a major catalyst for economic expansion.

Beyond 2025, the IMF also raised its growth forecast for Nigeria in 2026 to 3.2%, a 0.5 percentage point increase from its earlier 2.7% projection. While this trajectory indicates a positive outlook, Nigeria’s growth rate still remains below the Sub-Saharan African regional average of 4.0% for 2025. However, it positions the country ahead of South Africa, whose forecast was held unchanged at 1.0%.

Despite the encouraging forecast, the IMF’s report carries a note of caution. The global economic body warned that the optimism could be tenuous, as much of the recent global improvement stems from firms and countries “front-loading” trade and investment in anticipation of future tariff increases. This could potentially lead to a “payback” period in 2026, where reduced demand and policy tightening may weigh on economic performance.

Domestically, the forecast also conceals underlying vulnerabilities. Analysts, including Tunde Abidoye of FBNQuest, have expressed cautious optimism, noting that while the projected growth is positive, it remains “too modest to tackle the poverty problem” in the country. The IMF’s own past reports have flagged persistent challenges, including high inflation, fiscal pressures, and insecurity, all of which continue to pose significant risks to the economy.

The latest forecast comes a few weeks after the National Bureau of Statistics (NBS) reported that Nigeria’s economy grew by 3.13% in the first quarter of 2025, marking an improvement from the 2.27% recorded in the same period of 2024. The IMF’s revised projections, therefore, align with and lend credibility to the recent data, reinforcing confidence in Nigeria’s short-term economic prospects.