ECONOMISTS have warned that Nigerians should cautiously embrace the International Monetary Fund (IMF) projection of 4.4 per cent economic growth outlook for their country, warning that longstanding economic issues are significant barriers to its realisation.

In its latest projections, the IMF raised its growth forecasts for Nigeria to 4.4 per cent from 3.9 per cent, citing improved macroeconomic conditions and economic reforms by the President Bola Tinubu-led administration.

The new projection is contained in the IMF’s latest report for January 2026 World Economic Outlook (WEO) Update, titled “Global Economy: Steady amid Divergent Forces,” and released on Monday, January 19.

According to the IMF, Nigeria’s economy is expected to maintain a steady expansion path, rising from 4.1 per cent in 2024 to 4.2 per cent in 2025, before accelerating to 4.4 per cent in 2026. The new estimate represents a 0.2 percentage point upward revision from the iMF’s October 2025 projection.

It disclosed that Nigeria’s improved outlook mirrored a broader pickup across sub-Saharan Africa, where growth is projected to reach 4.6 per cent in 2026 and 2027.

The Fund attributed the regional performance to “macroeconomic stabilisation and continued reform efforts” across key economies.

Despite the optimism that greeted the forecasts, economists stressed the need for cautious optimism, noting that the government needed to address core legacy issues, including insecurity in the food-belt states, the high cost of credit lending to small-scale businesses, and high import duties.

While inflation has eased since last year December to 15.5 per cent, the structural drivers of costs, especially energy, transportation, logistics and insecurity, remain firmly in place.

Economist Musa Yusuf, who heads the Centre for the Promotion of Private Enterprise (CPPE), told The ICIR that core legacy issues should be properly addressed for the realisation of the projected growth.

“Persistent structural challenges continue to drive inflationary pressures that need to be addressed, such as energy and fuel costs, rising transportation and logistics expenses, insecurity affecting agricultural output, and high cost of credit and import duties,” he said.

Yusuf, a former Director-General of Lagos Chamber of Commerce, stressed that major drivers of inflation, namely goods, beverages, housing, restaurants, transportation and fuel, accounted for 72 per cent of inflation pressures and remained key challenges.

Economist and Senior Analyst at the Financial Derivative Company (FDC), Dumebi Oluwole, made similar submissions and urged the government to build on an improved macroeconomic outlook and formalisation of the economy through the new tax laws.

“We have seen appreciable progress in manufacturing, Telcom and financial services, insurance, banking recapitalisation. We are also expecting more formalisation of the informal economy through the new tax laws, which could help improve productivity levels,” she said.

She stressed that “In a pre -election year, policy pronouncements could bring in more cash and nudge inflation. At the output level, more construction work is expected, which could spur the manufacturing sector.

She added, “The political economy doesn’t live in isolation. There could be a move from the government this year, but they should be cautious not to cause any disruption from the policies.”

In its global forecasts, the IMF projected 3.3 per cent growth for Nigeria in 2026, noting that the world economy remained resilient despite persistent uncertainties. The outlook, the Fund said, reflects a “balancing of divergent forces,” as the negative effects of changing trade policies are being offset by rising investment in technology and artificial intelligence (AI).

For Nigeria, the IMF identified energy prices as a critical factor shaping the 2026 outlook. It projected that “energy commodity prices are expected to decline by about seven per cent in 2026,” largely due to weak global demand.

However, the report noted that oil prices were being supported by what it described as a “soft price floor,” driven by coordinated production management by OPEC+ and crude stockpiling by China, helping to limit downside pressures.

Despite the improved forecast, the IMF warned that risks to the outlook remain tilted to the downside. These risks include escalating geopolitical tensions in the Middle East and Ukraine, with potential spillovers to supply chains; renewed trade tensions and protectionist measures, which could heighten global uncertainty; and high public debt and fiscal deficits, capable of exerting upward pressure on long-term interest rates.

To sustain growth, the IMF urged Nigerian authorities to focus on “rebuilding fiscal buffers” and pressing ahead with “structural reforms without delay.”

The Fund stressed that “Central Bank independence remained critical for macroeconomic stability, especially in an environment of heightened global volatility. It also cautioned that any discretionary fiscal support should be well-targeted and must include clear sunset provisions to ensure such measures remain temporary.

Just like the Nigeria Economic Summit Group’s (NESG) 5.5 per cent economic projection in 2026, the IMF said Nigeria’s ability to meet its 2026 growth target would depend on the “consistent implementation of reforms” and the country’s capacity to withstand domestic and external shocks as the global economy continues to adjust.

 

Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.