The International Monetary Fund (IMF), in its latest World Economic Outlook (WEO) 2026, released yesterday, revised Nigeria's growth projection downward to 4.1 per cent in 2026, while projecting a modest recovery to 4.3 per cent in 2027, underscoring a fragile but improving medium-term outlook.
Equally, the IMF yesterday hailed the Central Bank of Nigeria (CBN) for the successful conclusion of the banking sector recapitalisation, noting that stronger capital buffers were already proving effective in cushioning the financial system against external shocks.
The revision of the WEO reflects growing external headwinds, even as the Washington-based institution signalled that underlying conditions could support a gradual rebound beyond the near-term shocks.
The Fund in its January WEO had previously forecast Nigeria's economy to grow by 4.4 per cent in 2026 and 4.1 per cent in 2027.
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The current update, therefore, marks a downward revision for 2026, highlighting intensifying near-term pressures while lifting the 2027 forecast, suggesting that some of these shocks could ease over time, allowing for a modest recovery.
Responding to THISDAY's question, the Division Chief in the IMF's Research Department, Deniz Igan, reiterated that Nigeria's outlook reflects a balance of opposing forces.
She pointed out that while on one hand, rising fuel and fertilizer prices, alongside elevated shipping costs linked to geopolitical tensions, were expected to weigh on non-oil activity, on the other, higher crude oil prices offer a partial cushion, preventing a sharper slowdown.
She said: "We have revised Nigeria's growth as well by 0.3 percentage point to 4.1 in 2026, and that is reflecting a balance of two forces. One is that the war-related higher fuel and fertilizer prices and higher shipping costs that I mentioned are going to weigh on oil activity in Nigeria. There's some offset coming from higher oil prices, but the end of the day, the balances are for weighing growth in 2026 with some recovery built in 2027."
On inflation and macroeconomic management, the IMF stressed the importance of maintaining tight monetary policy, with a data-dependent approach that closely monitors exchange rate movements and inflation expectations, as policymakers navigate a more volatile external environment.
"As far as inflation movements go, we believe that tight monetary policy and remaining data dependent and watching very carefully, both exchange rate movements and inflation expectations is going to be crucial to achieve the inflation target of central bank."
Speaking on Sub-Saharan Africa, IMF Chief Economist Pierre-Olivier Gourinchas, said the downgrade of the continent's projection was part of a broader trend across Sub-Saharan Africa, where economies are facing weaker growth and rising inflation amid global uncertainty, particularly from energy market disruptions.
He said: "We are seeing some downgrade of growth, and we are seeing some uptick in inflation in a number of countries in the region.
"So, the impact is very much along the lines of what we see more broadly, which is for a lot of the countries, especially the ones that are energy importers, but there are also energy exporters in the region.
"So, there's some differentiation in terms of the in terms of the impact on the fund engagement, more than, I mean, we are certainly following with a number of countries what their needs must be in the current environment."
Meanwhile, the IMF endorsed Nigeria's banking sector recapitalisation drive, noting that stronger capital buffers were already proving effective in cushioning the financial system against external shocks.
The Fund stressed that stronger fiscal positions remained essential for emerging markets to withstand volatile global capital flows and reduce vulnerability to sudden market shifts.
Speaking at the presentation of the Global Financial Stability Report at the Spring Meetings, IMF Financial Counsellor and Director of the Monetary and Capital Markets Department, Tobias Adrian, said recapitalisation efforts tend to show their value most clearly during periods of stress.
He noted that building a well-capitalised banking system remains central to global financial stability, particularly as economies navigate heightened uncertainty.
He said: "Concerning bank recapitalisation, it is in times of stress where the value of bank capital really comes to the fore. So, what we are aiming at for global financial stability is a banking sector that is capitalised against adverse shocks.
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"So yes, the banking recapitalisation is welcome and are paying off, particularly under times of stress concerning debt to GDP and what the IMF is doing."
On capital flows to Sub-Saharan Africa, he explained that the ongoing Middle East conflict has triggered a stronger-than-usual shift in the movement of funds compared to past crises. He noted that the scale of capital flow reactions was roughly twice what was seen in the early months of the Ukraine war.
He said: "When we are looking at capital flows since the beginning of the war in the Middle East, and compare that to previous episodes of conflict, we do see a sort of outsized reaction in terms of capital flows, but at the same time."
Commenting on capital flows, the Assistant Director of the Monetary and Capital Markets Department at the IMF, Jason Wu, said reliance is increasingly skewed towards debt rather than FDI and equity. He noted that across emerging markets, those with stronger fiscal positions tend to have better access to international markets and lower debt spreads.
