The International Monetary Fund (IMF) has retained its 2026 economic growth forecast for Nigeria at 4.1 per cent, saying the country’s improving macroeconomic stability and favourable terms of trade will continue to support expansion despite a weakening global economy.

The decision came as the IMF lowered its global growth forecast to 3 per cent for 2026 and 3.4 per cent for 2027, down from an average of 3.5 per cent in 2024 and 2025.

In its July 2026 World Economic Outlook (WEO) Update, titled ‘Global Economy in Crosscurrents of War and Technology,’ the Fund also maintained its 2027 growth projection for Nigeria at 4.3 per cent, unchanged from its April forecast.

The projection follows growth estimates of 4.1 per cent in 2024 and three per cent in 2025.

The Fund, however, warned that while Nigeria stands to benefit from higher crude oil prices, rising costs of essential goods are expected to worsen poverty and food insecurity, partly offsetting the gains from improved terms of trade.

Commenting on the regional outlook, Division Chief in the IMF’s Research Department, Deniz Igan, said the outlook for Sub-Saharan Africa (SSA) had been clouded by the impact of the Middle East conflict after the region recorded broad-based growth in 2025.

“We had seen a broad-based pickup in growth in 2025 in the region. We had an acceleration of growth to 4.5 per cent. Now, the war obviously has clouded the outlook for 2026, and we are now projecting a softening of growth to 4.3 per cent in the region as a whole,” she said.

According to her, beyond rising energy costs, higher fertiliser prices are emerging as another major challenge for many African economies because they coincide with planting seasons in several countries, posing risks to agricultural output.

“This is beyond the cost of energy for the region. What matters also is the increase in fertiliser prices that we have seen, and this is coinciding with the planting season in some countries, and it may hurt the agricultural sector, in addition to all the other impacts of energy prices. The agricultural sector accounts for a large share of some sub-Saharan economies,” she said.

The IMF noted that the region’s overall growth projection masks significant differences across countries, reflecting variations in policy space, the pace of reform implementation and exposure to both geopolitical shocks and the rapidly evolving technology landscape.

Igan said oil-importing and non-resource-intensive economies are bearing the brunt of rising energy and food prices, while some larger economies are continuing to benefit from reforms implemented before the current global shocks.

“Basically, what we are seeing is that the oil-importing, non-resource-intensive economies are more adversely affected by the higher energy and food prices, while some larger economies in the region are continuing to benefit from earlier stabilisation and reform efforts,” she said.

On Nigeria, she said the country’s outlook remained relatively stable because of its position as an oil exporter and improvements in macroeconomic conditions.

“Nigeria is expected to grow at 4.1 per cent, quite stable, and this is supported by improved macroeconomic stability and favourable terms of trade, with Nigeria being an oil exporter. At the same time, tighter prices mean there is some offset to that positive terms-of-trade effect because higher prices for essentials are expected to aggravate poverty and food insecurity,” she said.

The IMF projected SSA’s economy to expand by 4.3 per cent in 2026, describing the outlook as broadly stable despite considerable divergence across countries.

It also projected South Africa’s economy to grow by 1.1 per cent, supported by stronger policy frameworks and ongoing structural reforms, while growth across the rest of the region is expected to slow from 5.6 per cent in 2025 to 5.2 per cent this year and next.

Globally, the IMF painted a weaker picture, forecasting world output to grow by three per cent in 2026 and 3.4 per cent in 2027, compared with an average growth rate of 3.5 per cent recorded in 2024 and 2025.

The Fund attributed the weaker outlook largely to the economic impact of the prolonged Middle East war, particularly disruptions to global energy supply chains, although it noted that stronger-than-expected productivity gains from the accelerating adoption of artificial intelligence (AI) are helping to cushion part of the slowdown.

Global headline inflation is projected to increase from 4.1 per cent in 2025 to 4.7 per cent in 2026 before easing to 3.9 per cent in 2027, signalling that the disinflation trend that began in early 2024 has stalled.

The IMF also raised its average crude oil price assumption to 89 dollars per barrel for 2026, about nine per cent above its April forecast, citing supply disruptions linked to the closure of the Strait of Hormuz.

On artificial intelligence, Igan said African economies have opportunities to benefit from the technology but would need stronger digital infrastructure and investment in skills to maximise its gains.

“What is important to recognise is that, for countries to benefit, there are preconditions: how well they were already integrated into the technology chains, and, going forward, how well they can position themselves in terms of adopting AI.

“While SSA is poised to benefit from some of the adoption of AI, there is a need for more investment in infrastructure and in skills upgrading to reap even greater benefits,” she said.