The International Monetary Fund (IMF) has downgraded its forecast for Nigeria’s economic growth rate from 4.4 percent to 4.1 percent in 2026.
The Bretton Wood organisation downgraded the rate in the
World Economic Outlook (WEO) report released on Tuesday.
The IMF also projected global growth at 3.1 percent in 2026
and 3.2 percent in 2027 — below the 3.4 percent recorded in 2024–2025.
According to the institution, 2026 global forecast was
revised downward by 0.2 percentage points largely due to disruptions linked to
the conflict.
According to IMF, the downgrade reflects the economic
fallout from the Middle East conflict, even though the global economy had
previously been supported by strong technology-related investment,
accommodative financial conditions and policy support.
The IMF also raised its inflation outlook, projecting global
headline inflation to climb to 4.4 percent in 2026 before easing to 3.7 percent
in 2027.
“Under the reference forecast, global growth is projected to
be 3.1 percent in 2026 and 3.2 percent in 2027, slower than its recent pace,”
the report said.
The fund described the outlook as a “reference forecast”
rather than a traditional baseline, citing uncertainty around the duration and
intensity of the conflict.
According to the institution, absent the war, global growth
would have been revised upward, with 2026 projections rising slightly to 3.4
percent.
“Hence, the downward revision for 2026 largely reflects the
disruptions from the conflict in the Middle East,” the fund said.
The IMF warned that risks remain tilted to the downside,
noting that an escalation in geopolitical tensions could trigger a major energy
shock, push global inflation above 5 percent, and further slow growth.
Under a more severe scenario, the institution said global
growth could fall to about 2 percent in 2026, while inflation could exceed 6
percent by 2027, with emerging markets bearing the brunt of the impact.
The fund also flagged additional risks from trade
fragmentation, rising fiscal deficits, debt pressures, and potential financial
market corrections linked to artificial intelligence-driven valuations.
On policy response, the IMF urged central banks to remain
vigilant and ready to act decisively to prevent inflation expectations from
becoming unanchored, while advising governments to preserve fiscal
sustainability and strengthen buffers.
“Central banks should remain vigilant and be prepared to act
clearly and decisively in line with their mandates,” it said.
The IMF added that fiscal interventions, where necessary,
should be “targeted, timely, temporary,” and backed by reprioritised spending
to avoid worsening debt vulnerabilities.
The institution further called for stronger international
cooperation to ease trade tensions and restore stability in global economic
relations.
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