World Bank forecasts that Nigeria's economy will grow by 3.6% this year as reforms start to work

WORLD Bank officials have projected that Nigeria will witness a 3.6% growth in her gross domestic product (GDP) during the course of 2025 as some of the recent reforms introduced by the federal government should start to yield fruit.

Since the coronavirus pandemic, Nigeria has struggled to get back on her feet, with both economic output and oil production, lagging behind pre-pandemic levels. To make matters worse, the removal of a national petrol subsidy by the federal government has led to hyper-inflation, with the cost of basic foodstuffs soaring by about 30%, creating widespread hardship.

With things looking very gloomy, the government has had to resort to more borrowing to fund its budget due to a revenue shortfall. However, the World Bank believes that the recent government reforms have helped to boost business confidence and should result in a projected 3.6% average economic growth  between 2025 and 2026.

It its recent Global Economic Prospects, January 2025 report, the World Bank said: “In Nigeria, gross domestic product (GDP), growth increased to an estimated 3.3%  in 2024, mainly driven by services sector activity, particularly in financial and telecommunication services. Macro-economic 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.

“Growth in Sub Saharan Africa is expected to firm to 4.1% in 2025 and 4.3%% in 2026, as financial conditions ease alongside further declines in inflation. Following weaker-than-expected regional growth last year, growth projections for 2025 have been revised upward by 0.2 percentage points and for 2026 by 0.3 percentage points, with improvements seen across various subgroups.

"At the country level, projected growth has been upgraded for nearly half of sub-Saharan African economies in both 2025 and 2026. Growth in Nigeria is forecast to strengthen to an average of 3.6% a year in 2025/26.

"Following monetary policy tightening in 2024, inflation is projected to gradually decline, boosting consumption and supporting growth in the services sector, which continues to be the main driver of growth. Oil production is expected to increase over the forecast period but remain below the Opec quota. The baseline forecast implies that per capita income growth will remain weak over the forecast horizon.”