The International Monetary Fund (IMF) has released its latest economic outlook for Nigeria following the conclusion of its 2025 Article IV consultation, a regular assessment of member countries’ economic policies and performance.
EKO HOT BLOG reports that the outlook provides a mixed but cautiously optimistic picture of Nigeria’s economic trajectory, with notable improvements in macroeconomic stability alongside persistent challenges such as inflation, poverty, and insecurity.
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Nigeria’s Economy Expected to Grow by 3.4% in 2025
According to the IMF, Nigeria’s real Gross Domestic Product (GDP) is projected to expand by 3.4 percent in 2025, maintaining the same pace as in 2024. This growth is expected to be driven by three main factors: increased oil production, the operation of a new domestic refinery, and continued strength in the services sector.
The IMF noted that growth in 2024 was similarly recorded at 3.4 percent, supported by rising hydrocarbon output and a vibrant services industry.
However, agriculture remained sluggish due to persistent security challenges and declining productivity. Over the medium term, growth is projected to hover around 3.5 percent, assuming ongoing domestic reforms continue to yield results.
‘Major Reforms Have Improved Stability but Risks Remain’
The IMF commended Nigeria’s recent policy reforms, describing them as crucial for strengthening macroeconomic stability. These include the removal of costly fuel subsidies, ending the monetary financing of fiscal deficits, and improving the functioning of the foreign exchange market. As a result, investor confidence has risen, enabling Nigeria to re-access the Eurobond market and attract portfolio inflows.
The IMF also reported increased gross and net international reserves in 2024, alongside a strong current account surplus. These changes, combined with tighter macroeconomic policies, have helped stabilise the naira and contributed to a decline in inflation.
Inflation fell to 23.7 percent year-on-year in April 2025, down from an average of 31 percent in 2024, based on the rebased Consumer Price Index by the National Bureau of Statistics (NBS). The IMF expects inflation to continue declining, provided fiscal and monetary tightening is sustained and fuel prices ease.
Nonetheless, the report cautions that downside risks have increased due to heightened global uncertainty. A significant drop in oil prices or higher financing costs could harm growth, weaken Nigeria’s fiscal and external positions, and place renewed pressure on the exchange rate.
‘Poverty and Food Insecurity Still Worsening’
Despite improved economic indicators, the IMF acknowledged that poverty and food insecurity have worsened. It warned that further deterioration in Nigeria’s security environment could undermine economic progress and deepen the humanitarian crisis.
The government, according to the Fund, is now focused on raising growth rates to address these social challenges. While recent reforms have laid a foundation for recovery, the IMF’s outlook notes that sustainable progress will depend on continued reform momentum and targeted efforts to tackle insecurity and improve agricultural productivity.
FURTHER READING
In summary, while Nigeria’s macroeconomic environment is showing signs of recovery and resilience, the IMF’s forecast highlights a dual reality: improving fiscal and monetary stability on one hand, and deepening socioeconomic vulnerabilities on the other.
Philip Ibitoye is a Special Correspondent with EKO HOT BLOG. Click here to find daily analysis and critical insight on trending issues in Lagos and other parts of Nigeria.
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