The latest African Economic Outlook 2025 (AEO) by the African Development Bank (AfDB) projected that Nigeria was expected to record an average inflation of 24.7 per cent for 2025 before recording a significant decline to 17.3 per cent in 2026.
The report highlighted inflation as one of the most pressing challenges facing Nigeria’s economy in the short term, driven by exchange rate depreciation, high energy and food costs, and ongoing structural reforms.
Also, Tuesday, Nigeria approved a fresh $500 million replenishment of the Nigeria Trust Fund (NTF) at AfDB, extending the facility for another 15 years.
Dr. Akinwumi Adesina, President of the AfDB, announced this during his opening remarks at the ongoing AfDB Annual Meetings in Abidjan, as he expressed appreciation to President Bola Ahmed Tinubu and Vice President Kashim Shettima for their continued support.
Also, António Guterres, the secretary-general of the United Nations, praised Adesina, for his transformative leadership and unwavering commitment to Africa’s development over the past decade.
The AEO report also projected that monetary tightening, improved agricultural output, and easing global supply constraints could contribute to a notable drop in inflation by 2026.
However, the bank warned that further fiscal and structural adjustments would be critical to sustaining disinflation.
On the growth front, Nigeria’s real Gross Domestic Product (GDP) was projected to expand by 3.2 per cent in 2025, slowing slightly to 3.1 per cent in 2026.
This reflects a downward revision of 0.3 and 0.5 percentage points, respectively, from earlier AfDB forecasts.
The weaker outlook was attributed to global economic headwinds, reduced external demand from key partners like the U.S. and China, and lingering uncertainty in financial markets.
Despite these challenges, the bank noted that improving oil output and increased local refining capacity—especially with the ramp-up of the Dangote refinery—have helped strengthen Nigeria’s external position.
The country’s current account surplus, which stood at an estimated 9.2 percent of GDP in 2024, was forecast to moderate to 4.7 per cent in 2025, and 3.9 percent in 2026 as global conditions tighten.
Nigeria’s fiscal deficit was projected to remain elevated, at four per cent of GDP in 2025 and –4.2 per cent in 2026, underscoring the need for stronger revenue mobilisation efforts.
The report noted that West Africa’s real GDP growth was expected to average 4.3 per cent in both 2025 and 2026, slightly lower than earlier projections.
Nigeria, Ghana, and Sierra Leone are expected to grow below the five per cent regional threshold, while other economies in the bloc are set to benefit from stronger domestic demand, new oil and gas production notably in Senegal and Niger, and rising value addition in agriculture.
The report stated: “Real GDP is projected to moderate to 3.2 per cent in 2025 and 3.1 per cent in 2026, as global uncertainty has increased.
“Services and industrial expansion will drive the economy as inflation moderates and higher oil production reaches 1.8 mbpd.
“Inflation is projected to moderate to 24.7 per cent in 2025 and 17.3 per cent in 2026, supported by tight monetary policy. The fiscal deficit is projected to remain at four per cent of GDP. The current account surplus is projected to narrow to 4.7 per cent of GDP in 2025 and 3.9 per cent in 2026, as imports start to normalise.
“The risks to the outlook include rising geopolitical tensions and greater policy uncertainty, volatile commodity prices, lower oil prices, slowdown in reform momentum, insecurity, and adverse weather events.”
