July 31, 2025/CSL Research
The International Monetary Fund (IMF), in its July 2025 World Economic Outlook (WEO) titled “Global Economy: Tenuous Resilience amid Persistent Uncertainty,” has revised Nigeria’s economic growth forecast upward. The IMF now projects Nigeria’s GDP to grow by 3.4% in 2025 and 3.2% in 2026—an improvement of 0.4 and 0.5 percentage points, respectively, from the 3.0% (2025) and 2.7% (2026) forecasts published in the April 2025 WEO. On a broader scale, the IMF also raised its global growth forecasts, projecting 3.0% growth in 2025 and 3.1% in 2026, compared to 2.8% and 3.0%, respectively, in the April forecast. According to the IMF, the upward revisions reflect:
• Stronger-than-expected front-loading of activity ahead of anticipated higher tariffs
• Lower-than-expected effective U.S. tariff rates
• Improved financial conditions, partly due to a weaker U.S. dollar
• Fiscal expansion in several major economies
Furthermore, growth in the Sub-Saharan Africa region is also projected to come in stronger than earlier anticipated in April 2025 reflecting stronger-than-expected performance across several economies. The IMF now projects SSA growth at 4.0% in 2025 and 4.3% in 2026, representing increases of 0.2 and 0.1 percentage points, respectively, from the April 2025 projections. Despite the improved outlook, the IMF highlights persistent structural challenges that continue to weigh on the region’s growth potential. These include weak regional trade integration, inequitable and insufficient fiscal reforms and poor infrastructure, particularly in power and transportation. Meanwhile, South Africa’s economic growth forecast remains unchanged, with GDP expected to grow by 1.0% in 2025 and 1.3% in 2026, in line with the April 2025 projections.
The IMF’s upward revision to Nigeria’s growth forecast aligns closely with our in-house projection of 3.7% GDP growth for 2025. This growth trajectory is largely underpinned by sustained expansion in the telecommunications and digital services sectors, which continue to be key drivers of the Services sector. In Q1 2025, the Services sector grew by 4.3% y/y, accounting for approximately 79% of overall GDP growth during the quarter. While the agricultural sector underperformed in Q1, a moderate rebound is expected in the second half of the year, supported by government intervention programmes and the onset of the harvest season.
The oil sector is also projected to contribute positively, with an estimated 10.7% y/y growth, while non-oil GDP is expected to grow at around 3.3% y/y. That said, downside risks to the growth anticipations exist, with potential pressures on the overall performance of the domestic economy. These include persistent structural challenges such as insecurity in major food-producing areas, elevated inflationary pressures which can dampen consumer demand, infrastructural challenges across key sectors such as energy and power, and tight monetary conditions which would continue to limit access to credit.
Click here to download full report: CSL Nigeria Daily – 31 July 2025 – Economy.pdf
