The World Bank says Nigeria’s ongoing economic reforms are beginning to yield positive results, with improved growth and stronger macroeconomic stability.
In its latest Nigeria Development Update, the bank reported that the country’s economy grew by 4.0% in 2025, following a 4.1% expansion in 2024.
Growth was largely driven by the services sector, including ICT, financial services, and real estate, while early 2026 indicators point to continued expansion despite global uncertainties.
Inflation has declined significantly over the past year, dropping to 15.1% in February 2026 from 26.3% a year earlier.
Food inflation also eased to 12.1%, helping to reduce pressure on household incomes, particularly among low-income groups.
However, the bank cautioned that these gains remain fragile.
Rising global energy and commodity prices, linked to tensions in the Middle East, are beginning to reverse some progress.
Petrol prices rose by 45% within a month, while diesel surged to about ₦1,800 per litre, increasing risks to inflation and cost of living.
Despite these pressures, Nigeria’s external position remained relatively strong in 2025.
Improved exchange rate competitiveness, steady remittance inflows, and sustained foreign portfolio investments supported a current account surplus of 4.8% of GDP.
External reserves also strengthened, with net reserves at $34.8 billion and gross reserves at $45.5 billion.
On the fiscal side, the deficit widened slightly to 3.1% of GDP in 2025, up from 2.8% in 2024, as increased non-oil revenues were offset by higher federal recurrent spending and expanded capital expenditure by state governments.
Looking ahead, the World Bank projects Nigeria’s economy will grow modestly to about 4.2% between 2026 and 2028, supported by continued reforms and improved macroeconomic stability.
However, it warned that poverty reduction will remain slow due to weak job creation and the lingering impact of inflation.
The bank stressed the need for sustained reform momentum, including stronger revenue mobilisation, better fiscal governance, and improved investment in infrastructure and human capital.
It also advised the government to avoid using higher oil revenues to fund subsidies or permanent spending increases, describing such gains as temporary.
Instead, it recommended rebuilding fiscal buffers and providing targeted, time-bound support to vulnerable households.
The bank further called for tight monetary policy to control inflation and maintaining exchange rate flexibility to cushion external shocks, especially as global uncertainties persist.