IMF Sees Global Growth Slowing to 3%, Projects Nigeria at 4.1%

The International Monetary Fund (IMF) has projected that the global economy will slow to 3.0 per cent in 2026 before rebounding to 3.4 per cent in 2027, while forecasting Nigeria’s economy to expand by 4.1 per cent this year, supported by improved macroeconomic stability and favourable terms of trade.

The Fund, however, warned that despite Nigeria’s stronger growth outlook, higher prices for essential goods could worsen poverty and food insecurity, even as geopolitical tensions, trade fragmentation and commodity price volatility continue to pose significant risks to the global economy.

The projections are contained in the IMF’s July 2026 World Economic Outlook (WEO) Update, titled “Global Economy in Crosscurrents of War and Technology.”

According to the report, the ongoing conflict in the Middle East is weighing on energy-importing economies, while countries integrated into the global technology value chain are benefiting from rising demand driven by advances in artificial intelligence (AI).

“The impact varies widely based on countries’ exposure to the war and position in the technology value chain,” the IMF said.

It noted that while energy exporters outside the conflict zone are benefiting from favourable terms of trade, many low-income, energy-importing economies with limited participation in the AI-led technology boom are expected to experience weaker economic activity.

The Fund also projected global headline inflation to rise from an estimated 4.1 per cent in 2025 to 4.7 per cent in 2026, before easing to 3.9 per cent in 2027, suggesting that the disinflation trend recorded since early 2024 has stalled.

For Sub-Saharan Africa, the IMF expects economic growth to remain stable at 4.3 per cent in 2026 before rising slightly to 4.5 per cent in 2027, although it noted that the regional outlook varies considerably depending on policy reforms, fiscal space and exposure to external shocks.

The report projected Nigeria’s economic growth to improve further to 4.3 per cent in 2027, attributing the outlook to ongoing macroeconomic reforms and stronger external conditions.

“Nigeria is supported by improved macroeconomic stability and favourable terms-of-trade effects, though higher prices for essentials are expected to further aggravate poverty and food insecurity,” the report stated.

Among advanced economies, the IMF forecast growth of 1.7 per cent in 2026 and 1.8 per cent in 2027, while emerging markets and developing economies are expected to grow by 3.8 per cent this year before recovering to 4.5 per cent next year.

Growth in the Middle East and Central Asia is projected to slow sharply to 0.7 per cent in 2026 before rebounding strongly to 6.5 per cent in 2027, while Latin America and the Caribbean are expected to post growth of 2.4 per cent this year and 2.7 per cent in 2027.

The IMF also projected growth in emerging and developing Europe at about 2.0 per cent.

While noting that risks to the global outlook are more balanced than in April, the Fund maintained that they remain tilted to the downside.

It warned that renewed escalation of the Middle East conflict could prolong commodity price volatility, disrupt global supply chains, increase inflationary pressures and tighten financial conditions.

Other downside risks identified include trade fragmentation, possible corrections in technology-driven financial markets and weakening fiscal buffers.

On the upside, the IMF said faster normalisation of energy markets, stronger AI-related investment, renewed international cooperation to reduce trade barriers and sustained structural reforms could improve medium-term global growth prospects.

The Fund urged policymakers to preserve price stability through credible monetary policy, central bank independence and strong financial sector supervision while rebuilding fiscal buffers and pursuing reforms that strengthen energy security, improve AI readiness and deepen international cooperation.