Economic Growth Forecast
The World Bank has forecasted Nigeria’s economy to grow by 3.5% in 2025, with a slight increase to 3.7% in 2026, according to its latest Global Economic Prospects report. This projection represents a modest recovery amidst persistent economic challenges and global uncertainties.

In 2024, Nigeria’s economic growth was estimated at 3.3%, driven primarily by strong performance in the services sector, particularly in financial and telecommunication services.

Drivers of Growth in 2024
The World Bank attributed the growth in 2024 to several factors:

• Services Sector Expansion: Financial and telecommunication services played a pivotal role in boosting economic activity.
• Macroeconomic and Fiscal Reforms: The elimination of the implicit foreign exchange subsidy and unification of exchange rates improved revenue collection and business confidence.
• Monetary Policy Tightening: In response to rising inflation and a depreciating naira, the Central Bank of Nigeria implemented stricter monetary policies.
• Narrowing Fiscal Deficit: Increased government revenues helped reduce the fiscal deficit.

Outlook for 2025 and 2026
The World Bank projects that Nigeria’s economy will strengthen, with growth averaging 3.6% annually between 2025 and 2026. Key factors supporting this growth include:

• Declining Inflation: Monetary tightening in 2024 is expected to curb inflation, thereby boosting domestic consumption.
• Services Sector Resilience: Continued robust activity in financial and telecommunication services will remain the main growth driver.
• Higher Oil Production: Oil output is expected to increase, though it will remain below the OPEC production quota.
• Improved Domestic Demand: Recovering consumer confidence and spending will further support economic expansion.

Despite these positive projections, the report noted that per capita income growth would remain weak, highlighting the need for stronger economic reforms to improve living standards.

Nigeria’s Role in Regional Growth
Nigeria, alongside South Africa, played a significant role in boosting Sub-Saharan Africa’s average growth rate to 2.2% in 2024. Nigeria’s higher oil production and South Africa’s improved electricity supply were pivotal to this performance. Meanwhile, the rest of Sub-Saharan Africa experienced an average growth rate of 4.0% during the same period, indicating regional variations in economic recovery.

Challenges to Economic Recovery
The World Bank identified several risks that could impede Nigeria’s economic growth:

• Inflationary Pressures: Persistent inflation could weaken domestic purchasing power.
• Weak Naira: Currency instability remains a critical challenge for economic stability.
• High Debt-Servicing Costs: Rising public debt continues to strain fiscal resources.
• Vulnerabilities in Fiscal Buffers: Limited fiscal capacity to respond to economic shocks could slow recovery.

Recommendations for Sustainable Growth
The report emphasized the need for continued structural reforms to address these challenges and support sustainable economic growth. Key recommendations include:

• Strengthening fiscal buffers through improved revenue collection and efficient public spending.
• Enhancing monetary policy to maintain price stability and support economic growth.
• Encouraging private sector investment, particularly in non-oil sectors such as technology and services.
• Addressing infrastructure deficits to improve productivity and competitiveness.

Conclusion
While Nigeria’s economic outlook shows signs of recovery, the path to sustainable growth requires addressing persistent structural issues. By leveraging its strong services sector and implementing reforms to tackle inflation, fiscal vulnerabilities, and currency instability, Nigeria can lay the foundation for long-term economic resilience and improved living standards for its citizens.