The International Monetary Fund (IMF) has raised Nigeria’s economic growth forecast for 2026 to 4.2 per cent from 4.1 per cent, citing improved macroeconomic stability and favourable trade conditions.
However, the Fund warned that rising food and energy prices, geopolitical tensions and potential financial market corrections linked to artificial intelligence (AI) could threaten global economic growth.
The revised projection was contained in the IMF’s October 2026 World Economic Outlook report, titled Resilience Under Strain, Urgent Choices, released on Monday during the ongoing IMF and World Bank annual meetings in Bangkok, Thailand.
The IMF expects economic growth across sub-Saharan Africa to remain steady at 4.5 per cent in 2026. However, it noted that economic performance across the region would vary depending on countries’ policy decisions, access to financing and exposure to commodity price fluctuations.
According to the Fund, Nigeria is benefiting from greater macroeconomic stability and favourable terms of trade. It cautioned, however, that rising prices of essential goods could worsen poverty and food insecurity.
Global Growth Faces Mounting Risks
Despite the global economy’s resilience in the face of repeated shocks, the IMF warned that growth prospects remain under pressure.
The Fund projects global economic growth to slow from 3.5 per cent in 2025 to 3.1 per cent in 2026 before recovering to 3.4 per cent in 2027.
Speaking at the World Economic Outlook press briefing, the IMF’s Economic Counsellor and Director of the Research Department, Sylvana Tenreyro, said global growth had remained resilient but faced increasing risks.
She urged governments to move beyond managing economic shocks and strengthen their capacity to withstand future disruptions.
Tenreyro identified rising energy and commodity prices as significant pressures on economic activity, while noting that investments associated with artificial intelligence continued to support growth.
The IMF warned that prolonged geopolitical tensions could keep food and energy prices elevated, fuel inflation, strain government finances and erode household purchasing power.
Global inflation is projected to rise from 4.1 per cent in 2025 to 4.7 per cent in 2026 before easing to 4.1 per cent in 2027.
IMF Flags AI Investment Risks
The Fund also raised concerns about the rapid expansion of artificial intelligence investments, warning that the boom could trigger financial instability if expectations about future profits and productivity gains fail to materialise.
Although AI-related investments have supported economic activity and international trade, the IMF observed that much of the resulting gains are concentrated in a relatively small number of companies, sectors and economies.
It warned that a sharp reassessment of the profitability of AI investments could prompt companies to cut spending, trigger stock market declines and tighten financial conditions.
The effects could extend to countries connected to technology supply chains and financial markets with significant exposure to technology stocks.
IMF Urges Fiscal Discipline and Economic Resilience
To address the growing risks, the IMF urged governments to strengthen public finances, safeguard financial stability and encourage private-sector investment and productivity.
The Fund stressed that fiscal policy should help contain demand pressures, particularly as inflation risks remain elevated.
It also highlighted the importance of monetary policies focused on price stability, emphasising that central bank independence remains critical to achieving that objective.
The IMF said countries must strengthen their capacity to withstand future economic shocks while pursuing policies that promote sustainable and inclusive growth.
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