Oil gains won’t shield Nigeria, IMF warns

…cuts Nigeria’s growth to 4.1 percent in 2026

The International Monetary Fund (IMF) trimmed Nigeria’s 2026 growth outlook to 4.1 percent from 4.4 percent on Tuesday, warning that even a rally in oil prices won’t be enough to insulate the country from wider global volatility. While the IMF noted that higher crude revenues offer some fiscal relief, they remain insufficient to shield Africa’s most populous economy from the mounting pressure of external economic shocks.

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Speaking at the ongoing IMF/World Bank Spring Meetings in Washington D.C., Pierre-Olivier Gourinchas, the IMF’s Economic Counsellor and Director of Research, said the effects of the current global environment, driven by geopolitical tensions and rising energy costs are largely negative for many economies, particularly energy importers.

“For many countries, especially energy importers, the effects are negative, although there is some differentiation, as a number of countries in the region are also energy exporters,” Gourinchas said.

He noted that the fund is closely monitoring developments in energy markets and engaging with countries to assess emerging financing and policy needs, while also coordinating with global institutions to respond to the evolving crisis.

Providing more country-specific insights, Petya Koeva-Brooks, deputy director in the IMF’s Research Department, said Nigeria’s growth outlook has been revised downward by 0.3 percentage point to 4.1 percent in 2026, reflecting a balance of opposing forces.

According to her, while higher global oil prices are expected to support government revenues and provide some external buffer, the overall impact of the shock remains negative.

“The war-related increase in fuel and fertilizer prices, as well as higher shipping costs, are expected to weigh on non-oil activity in Nigeria,” she said. “There is some offset from higher oil prices, but on balance, the effect is a drag on growth in 2026, with a recovery expected in 2027.”

Koeva-Brooks added that the broader Sub-Saharan Africa region is also facing mounting headwinds, including weaker global growth, softer non-oil commodity prices, and worsening terms of trade for oil-importing economies.

She noted that the region is further constrained by declining foreign aid flows, with bilateral support projected to fall between 16 percent and 28 percent in 2025, a trend expected to persist.

As a result, growth across the region has been downgraded, while inflationary pressures are set to intensify, driven by higher energy and fertilizer prices, potential fuel shortages, and rising borrowing costs.

For Nigeria, these pressures are particularly significant given the importance of agriculture and the sensitivity of food prices to input costs such as fertilizer.

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On inflation and monetary policy, Koeva-Brooks stressed the need for continued vigilance by the Central Bank of Nigeria, noting that a tight and data-dependent policy stance will be critical in navigating the current environment.

“Close monitoring of exchange rate movements and inflation expectations will be essential to achieving price stability,” she said.

Despite the near-term challenges, the IMF expects some improvement in Nigeria’s growth trajectory beyond 2026, as global conditions stabilise and domestic adjustments take hold.