IMF forecasts 3% growth for Nigeria in 2025, outpacing most EMs

The International Monetary Fund (IMF) has forecasted a 3% growth rate for Nigeria in 2025. Although this is a slight decrease from the 3.1% projected for 2024, it surpasses the growth estimates for most emerging markets, according to the IMF’s latest World Economic Outlook released on Tuesday.

In comparison, South Africa’s growth is expected to reach 1.2% in 2025, up from 0.9% this year, while Brazil’s economy is projected to grow by 2.4%, rising from 2.1% in 2024. Mexico is anticipated to see a 1.6% growth in 2025, down from 2.2% in 2024.

Despite these projections, India’s growth remains significantly higher, with a forecasted 6.5% increase in 2025, slightly down from 7% this year.

Nigeria is currently implementing several monetary reforms, including the central bank’s efforts to clear the foreign exchange backlog and the federal government’s removal of petrol subsidies. However, these reforms face challenges from rising inflation and increasing poverty levels, which could undermine their effectiveness.

The report also noted that Sub-Saharan Africa’s growth is expected to rise to 4.1% in 2025, up from 3.7% in 2024.

Globally, the growth outlook remains consistent with previous projections from April. Nevertheless, the IMF warns that rising inflation might delay the normalization of monetary policies in emerging markets.

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Central banks in these economies are advised to be cautious about cutting rates too soon, due to external risks from changing interest rate differentials and potential currency depreciation against the dollar.

The IMF report emphasizes the need for central banks to carefully manage inflation risks and maintain economic growth. It suggests that where inflation pressures persist, further tightening of monetary policies might be necessary, while gradual easing should only occur when there are clear signs of stable prices. Additionally, some countries may need to adopt significantly tighter fiscal stances to address past fiscal slippages.