World Bank Downgrades Nigeria’s 2026 Economic Growth to 4.1% Amid Global Uncertainty

The World Bank has revised Nigeria’s economic growth forecast for 2026 downward to 4.1 percent, reflecting persistent global uncertainties and domestic structural challenges. This marks a decline from the bank’s October 2025 projection of 4.4 percent for 2026 and 2027. The outlook for 2027 and 2028 has also been lowered to 4.2 percent and 4.3 percent respectively, signaling a more gradual recovery than previously expected.

In its April 2026 Africa Economic Update titled “Making Industrial Policy Work in Africa,” the World Bank highlighted that Nigeria’s services sector—including ICT, finance, and real estate—will remain the primary engine of growth. Agriculture and industry, by contrast, are projected to expand more slowly due to structural constraints, underscoring the need for targeted reforms to boost productivity and diversify the economy.

The bank expects inflation to decline from 23 percent in 2025 to 14.9 percent in 2026 and further to 10.7 percent by 2028, reflecting the delayed impact of policy tightening and improving supply conditions. While poverty remains elevated, it is projected to ease gradually as inflation falls, although higher fuel prices tied to Middle East tensions may slow progress.

The World Bank noted that sub-Saharan Africa’s growth is also slowing, with the region projected to expand by 4.1 percent in 2026—unchanged from 2025 but down 0.3 percentage points from earlier forecasts. Several major economies, including Angola, Kenya, Mozambique, Nigeria, Senegal, South Africa, and Zambia, saw their growth estimates downgraded, affecting roughly 60 percent of regional economies. Despite this, macroeconomic stabilization, stronger domestic currencies, and easing fuel and food prices have helped support private consumption and investment across the region.

Looking at the sources of growth, household consumption is expected to contribute 1.6 percentage points to GDP in 2026, slightly lower than 2025, while investment will rise modestly to 1.0 percent. The services sector will account for about half of total growth, led by finance, ICT, wholesale and retail trade, and tourism. However, the World Bank cautions that gains remain vulnerable to external shocks, particularly rising energy prices, commodity volatility, and geopolitical risks, which could disrupt trade and inflation trends in the coming years.

source: The Cable