The World Bank has said Nigeria’s ongoing economic reforms are beginning to deliver results, with stronger growth and improving macroeconomic stability.
In its latest Nigeria Development Update released Tuesday, the bank noted that the country’s economy remains on a steady growth path, largely driven by the services sector.
Nigeria’s real gross domestic product (GDP) grew by 4.0 percent in 2025, following a 4.1 percent expansion in 2024. Growth was powered by sectors such as ICT, financial services, and real estate.
Early indicators for 2026 suggest continued expansion across sectors, although global tensions have slightly slowed momentum.
Inflation has also eased significantly. According to the report, headline inflation dropped to 15.1 percent in February 2026 from 26.3 percent a year earlier, while food inflation declined to 12.1 percent offering some relief to households.
However, the bank cautioned that these gains remain fragile.
Rising global energy and commodity prices, linked to tensions in the Middle East, are already putting renewed pressure on inflation. Petrol prices jumped by 45 percent between February and March, while diesel nearly doubled to about N1,800 per litre.
Despite these challenges, Nigeria’s external position remained strong in 2025. A combination of improved exchange rate competitiveness, resilient remittances, and sustained foreign investment inflows helped maintain a current account surplus of 4.8 percent of GDP.
External reserves also improved, with net reserves rising to $34.8 billion and gross reserves hitting $45.5 billion — equivalent to 8.7 months of import cover.
On fiscal performance, the bank said Nigeria’s deficit widened slightly to 3.1 percent of GDP in 2025, up from 2.8 percent in 2024. This was driven by increased federal recurrent spending and higher capital expenditure by state governments.
Looking ahead, the World Bank projects Nigeria’s economy will grow modestly at about 4.2 percent between 2026 and 2028, supported by ongoing reforms and improved macroeconomic stability.
However, poverty reduction is expected to remain slow due to weak job creation and lingering inflationary pressures.
The bank stressed that sustaining reform momentum is crucial to achieving inclusive growth and improving living standards.
Warning on oil windfall
The World Bank advised the federal government against using increased oil revenues to fund subsidies or expand spending.
It warned that rising oil prices should be treated as a temporary windfall and used cautiously to preserve economic stability.
Instead, the bank recommended rebuilding fiscal buffers and, where necessary, directing limited support to vulnerable households through targeted and time-bound cash transfers.
It also emphasised the need for tight monetary policy to control inflation and continued exchange rate flexibility to absorb external shocks.
