Nigeria’s economy is on track for a modest rebound in 2025, with the World Bank projecting a 3.6% growth rate, buoyed by ongoing reforms and steady improvement in the non-oil sector.

This forecast, published in the Spring 2025 edition of Africa’s Pulse, represents a more optimistic stance than that of the International Monetary Fund (IMF), which revised its 2025 forecast downward to 3.0%, citing persistent structural challenges and weaker oil revenues.

According to the World Bank, the Nigerian economy will build on a 3.4% estimated expansion in 2024, with the upward momentum driven largely by services, particularly financial services, telecommunications, and information technology, as well as easing inflationary pressures and gradually recovering business confidence.

“Economic growth is expected to remain moderate in Nigeria. It is expected to increase from 3.4 per cent in 2024 to 3.6 per cent in 2025, and slightly increase to 3.8 per cent in 2026–27,” the report stated.

It added that the gradual recovery is “driven primarily by the service sector, specifically, finance, information and communications technology services, and transportation, and, to a lesser extent, a rebound in oil production that converges to its OPEC+ quota.”

However, the IMF’s April 2025 World Economic Outlook sounded a note of caution, projecting 2.7% growth for Nigeria in 2026.

The Fund flagged concerns over structural inefficiencies, weaker oil receipts, and external vulnerabilities as key risks weighing on future growth.

Inflation forecasts sharply diverge between the two institutions.

The World Bank expects inflation to ease significantly to 22.1% in 2025, down from an estimated 26.6% in 2024, and to fall further to 15.9% by 2027.

These figures follow the rebasing of the Consumer Price Index by the National Bureau of Statistics (NBS) in January 2025.

The rebasing initially triggered a sharp drop in inflation, with headline inflation falling from 34.80% in December 2024 to 24.48% in January 2025 before settling at 24.23% in March.

But food inflation and cost-of-living pressures remain.

The IMF, on the other hand, sees inflation remaining high, forecasting an average of 26.5% in 2025 and surging to 37.0% in 2026.

It blames this on persistent cost pressures, high exchange rate pass-through, and lingering inefficiencies despite ongoing reforms.

Meanwhile, the naira ranked among the weakest currencies in Africa in 2024, depreciating by over 40%.

The World Bank attributed the steep fall to Nigeria’s decision to unify and liberalise its multiple exchange rate windows, a reform intended to attract investment and improve foreign exchange liquidity.

The new market-determined exchange rate regime, while painful in the short term, has helped ease volatility and enhance macroeconomic predictability.

Externally, the World Bank expects Nigeria’s current account surplus to rise slightly, from 9.2% of GDP in 2024 to 9.4% by 2026, on the back of reduced imports, rising remittances, and stronger oil export earnings.

This projection contrasts with the IMF’s more cautious forecast of a narrowing surplus, dropping to 6.9% in 2025 and 5.2% in 2026, due to potential global oil price shocks and weakening external demand.

JP Morgan has echoed similar concerns, warning that oil prices falling below Nigeria’s fiscal breakeven of $60 per barrel could flip the surplus into a deficit.

Meanwhile, Fitch Ratings maintains a more moderate stance, projecting a current account surplus averaging 3.3% of GDP for 2025, 2026, supported by domestic refinery output and reforms in the energy sector.

Data from the Central Bank of Nigeria confirms that the country recorded a $6.83 billion balance of payments surplus in 2024, the first in three years, driven by a $13.17 billion trade surplus.

Nigeria also made a comeback to the Eurobond market in December 2024, raising $2.2 billion in its first international issuance since 2022.

The bond came with a 10.0% yield, noticeably higher than the 8.54% average in its 2018 offering.

The increased borrowing cost reflects global rate hikes and elevated risk perceptions across African markets, with the World Bank noting that similar trends are seen in countries like Cameroon.

Despite differing forecasts, both the World Bank and the IMF acknowledged the importance of Nigeria’s recent macroeconomic reforms, including the removal of fuel subsidies, the end of central bank deficit financing, and FX unification.

These efforts have been widely praised for their potential to improve fiscal sustainability and renew investor confidence.

Still, the IMF maintains a cautious tone.

It warns that inflation remains “entrenched,” and that the benefits of macroeconomic stability may not yet be reaching the average Nigerian.

According to the Fund, real per capita income is projected to grow by just 0.6% in 2025, suggesting that while the economy may be turning a corner, many citizens may not feel the impact anytime soon.