By Seun Ibiyemi
The International Monetary Fund (IMF) has retained its 4.1 per cent economic growth forecast for Nigeria in 2026 but warned that rising prices of food, energy and fertilisers could deepen poverty and worsen food insecurity, despite recent improvements in the country’s macroeconomic stability.
The warning came on Wednesday as the Fund also lowered its global economic growth projection for 2026 for the second time this year, citing the prolonged impact of the Middle East conflict and persistent geopolitical tensions.
In its latest World Economic Outlook (WEO) update, the IMF projected the global economy to grow by 3.0 per cent in 2026, down from the 3.1 per cent forecast issued in April, while global inflation is expected to accelerate to 4.7 per cent this year.
Despite the weaker global outlook, the Fund left Nigeria’s growth forecast unchanged at 4.1 per cent for 2026 and projected the economy to expand further to 4.3 per cent in 2027.
The IMF said growth across sub-Saharan Africa would remain broadly stable at 4.3 per cent in 2026, although performance would vary significantly depending on countries’ reform efforts, policy implementation and exposure to external shocks.
According to the report, oil-importing and non-resource-intensive economies in the region would bear the brunt of rising food and energy prices, while some larger economies, including Nigeria, have benefited from recent macroeconomic stabilisation measures despite weaker development assistance and limited gains from the global artificial intelligence boom.
The Fund cautioned that escalating global commodity prices could undermine recent economic gains by increasing the cost of living and worsening food insecurity across developing economies.
It projected that crude oil prices would rise by 32 per cent in 2026 compared with 2025 levels, while natural gas prices would increase by 22 per cent.
Fertiliser prices are expected to climb by 26 per cent, with global food prices projected to rise by eight per cent due to higher energy, transport and agricultural input costs.
The IMF warned that prolonged disruptions in energy and fertiliser markets could have severe consequences for low-income countries, particularly in sub-Saharan Africa.
“Food insecurity could worsen materially if disruptions in fertilizer and energy markets intensify or linger, especially in low-income countries in South Asia and sub-Saharan Africa, whose food supply is provided largely by smallholder farmers unable to outbid competitors from wealthier nations,” the report stated.
The Fund advised governments against implementing broad-based fuel subsidies, tax reductions or price controls, arguing that such measures are costly, poorly targeted and difficult to reverse.
Instead, it recommended temporary and targeted assistance for vulnerable households while maintaining macroeconomic policies aimed at restoring price stability.
“Fiscal policy should avoid broad-based subsidies, tax cuts, and price controls, which are typically poorly targeted, fiscally costly, and politically difficult to unwind.
If support is deemed necessary, it should be temporary, tightly targeted to vulnerable households, and embedded in a macroeconomic policy mix consistent with price stability,” the IMF said.
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The report also urged governments to rebuild fiscal buffers, strengthen tax administration, improve public spending efficiency and expand targeted social protection programmes to cushion vulnerable households from rising living costs without undermining debt sustainability.
On the global economy, the IMF attributed the downgrade in growth largely to the prolonged conflict in the Middle East, which has disrupted energy markets and global supply chains despite continued investment in artificial intelligence and technology.
The Fund said global economic growth would slow to 3.0 per cent this year before recovering to 3.4 per cent in 2027, describing the expected rebound as a “V-shaped recovery.”
IMF Research Department Division Chief, Deniz Igan, said although artificial intelligence-driven investment continues to support global demand, it has not been sufficient to offset the impact of geopolitical tensions, supply disruptions and higher commodity prices.
The IMF also warned that renewed conflict in the Middle East could further fuel inflation, tighten financial conditions, disrupt trade and pose additional risks to the global recovery.
