…3.2% projected for 2026 • Rewane: Nigeria’s economy cannot grow without fixing power supply
The International Monetary Fund (IMF) has revised Nigeria’s economic growth forecast upward, projecting a 3.4% Gross Domestic Product (GDP) growth for 2025 and 3.2% for 2026. This represents an increase from its earlier estimates of 3.0% and 2.7%, respectively, signalling cautious optimism about the country’s economic trajectory.
The revised projections were released on Tuesday in the IMF’s latest World Economic Outlook (WEO) report titled “Global Economy: Tenuous Resilience Amid Persistent Uncertainty.”
Despite the modest upgrade, the Fund warned that Nigeria and other Sub-Saharan African (SSA) countries must pursue urgent structural and institutional reforms to sustain growth and cushion against ongoing vulnerabilities.
At the virtual presentation of the report, Deniz Igan, Division Chief, IMF Research Department, highlighted regional trade integration, infrastructure investment, and reform of state-owned enterprises—especially in the energy and transport sectors—as critical areas requiring policy attention.
“Sub-Saharan Africa faces immense economic headwinds,” Igan said. “Structural reforms, such as better infrastructure and governance, are essential for unlocking renewed growth.”
She further called for equitable fiscal reforms, including eliminating poorly targeted tax exemptions, increasing reliance on progressive income taxes, and strengthening transparency to build public trust and prevent social unrest.
“There is an urgent need to mobilise revenue without exacerbating inequality. That requires better engagement with stakeholders, smarter sequencing of policy, and protecting the most vulnerable in society,” she noted.
Also speaking, IMF’s Director of Research, Pierre-Olivier Gourinchas, underscored the danger posed by high debt levels and persistent fiscal deficits in many developing economies, including Nigeria.
“The lack of fiscal space leaves many countries highly vulnerable to shifts in global financial conditions,” he warned. “Safeguarding central bank independence is key to maintaining investor confidence and macroeconomic stability.”
He stressed the importance of predictable trade and monetary policy environments, advocating for a renewed commitment to central bank independence, which he described as vital in anchoring inflation expectations and supporting stable economic growth.
Rewane: Power Crisis Threatens Nigeria’s Growth Prospects
While the IMF remains upbeat about Nigeria’s medium-term growth, leading economist and Managing Director of Financial Derivatives Company, Bismarck Rewane, has warned that any real progress will remain elusive unless Nigeria resolves its lingering power crisis.
Speaking on a national television programme on Tuesday, Rewane said that electricity outages are choking economic output in key industrial zones such as Lagos and Ogun States.
“Lagos and Ogun contribute about 30% of Nigeria’s GDP,” he said. “If you lose power for a month, you lose one-twelfth of 30% of national output—that’s a huge economic cost.”
He described the power sector’s woes as multi-dimensional, citing cultural inertia, pricing distortions, debt burdens, and chronic underinvestment as critical barriers.
“You cannot grow the economy with what we have today. The power crisis is not something you fix with a Band-Aid—it needs urgent, holistic intervention,” Rewane added.
Assessing broader economic trends, Rewane noted that Nigeria’s GDP grew by 3.13% in Q1 2025, with the service sector continuing to dominate, while manufacturing output lags. He also observed that agriculture has become more prominent in recent quarters, reflecting a structural shift within the economy.
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