Nigeria’s GDP Projected to Grow by 3.6% in 2025 – World Bank

According to the World Bank’s latest Global Economic Prospects report for Sub-Saharan Africa (SSA), Nigeria’s GDP is expected to grow at an average rate of 3.6 percent annually from 2025 to 2026.

The report highlighted that Nigeria’s growth rate increased to an estimated 3.3 percent in 2024, primarily driven by the performance of the services sector, particularly the financial and telecommunication industries.

“Macroeconomic and fiscal reforms helped improve business confidence. In response to rising inflation and a weak naira, the central bank tightened monetary policy. Meanwhile, the fiscal deficit narrowed due to a surge in revenues driven by the elimination of the implicit foreign exchange subsidy, following the unification of the exchange rate and improved revenue administration,” the World Bank explained.

The report also noted that inflation, following the tightening of monetary policy in 2024, is expected to decrease gradually, which is likely to stimulate consumption and support continued growth in the services sector.

The World Bank forecasted an increase in oil production over the period, though it will remain below the OPEC quota. This suggests that per capita income growth will continue to remain weak throughout the forecast period.

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The economic prospects for Sub-Saharan Africa showed a recovery, with growth rising from 2.9 percent in 2023 to an estimated 3.2 percent in 2024. This is a 0.3 percentage point decrease from the June projection, mainly due to the ongoing conflict in Sudan and other regional challenges that hampered the recovery.

Overall, the region’s growth is expected to strengthen to an average of 4.2 percent in 2025-2026, largely driven by improved prospects for industrial-commodity-exporting countries, including the continent’s largest economies.

“However, high government debt and elevated interest rates have narrowed fiscal space, prompting fiscal consolidation efforts in many countries, while financing needs remain high. Despite the projected pickup in growth, per capita income gains will remain inadequate to make significant progress in reducing extreme poverty in the region. Risks to the outlook remain tilted to the downside. These risks include weaker global growth due to heightened uncertainty and the potential for adverse changes in trade policies; a sharper-than-expected slowdown in China; increased regional or global instability, such as an escalation of conflicts in Sudan and in the Middle East, which could drive up energy and food price inflation in the region; increased risk of government distress amid a possibility of higher-for-longer global interest rates; and greater frequency and intensity of adverse weather events,” the report noted.

The report also observed that, combining the growth of Nigeria and South Africa, the region’s two largest economies, growth in these countries reached an average of 2.2 percent in 2024, driven by improved electricity supply in South Africa and increased oil production in Nigeria. Growth in other countries within the region was noted to be at 4.0 percent.

With inflation on the decline, the World Bank anticipates that a gradual reduction in policy interest rates will support private consumption and investment across many Sub-Saharan African nations during the forecast period.

The report further pointed out that limited fiscal space, due to high debt levels and rising borrowing costs, will continue to constrain government spending across the region. Fiscal balances are expected to improve, but at a slower pace.

“Primary fiscal deficits are, on average, forecast to close over the forecast period, with declining deficits in non-resource-rich countries and increasing surpluses in commodity-exporting countries,” the World Bank concluded.