IMF warns of inflation surge as global growth slows to 3.0%

…Says Nigeria holds firm at 4.1% amid war-tech crosscurrents

The International Monetary Fund (IMF) has sounded the alarm on a stalled disinflation trend, projecting global headline inflation to climb from 4.1 per cent in 2025 to 4.7 per cent in 2026, before easing to 3.9 per cent in 2027.

At the same time, global growth is forecast to slow to 3.0 per cent in 2026, down from the 3.5% average of 2024–25, as the world economy grapples with the dual shocks of Middle East conflict and accelerating technology-driven expansion.

The July 2026 World Economic Outlook Update highlights that while the war has disrupted energy flows and strained supply chains, the rapid adoption of artificial intelligence (AI) has powered demand momentum in advanced economies, lifting equity markets in the US, Japan, Korea, and Taiwan.

Yet the IMF cautioned that the concentration of valuations in AI stocks poses a correction risk that could reverberate across global markets.

For Nigeria, the IMF left growth projections unchanged at 4.1 per cent in 2026 and 4.3 per cent in 2027, placing the country among a select group of economies with steady forecasts despite global volatility. Nigeria benefits from its position as an energy exporter outside the conflict zone, with elevated crude prices supporting export receipts, FAAC distributions, external reserves, and the naira.

The Fund noted that stronger currency performance among energy exporters has helped contain inflation expectations and risk premiums, providing a tailwind for the Central Bank of Nigeria’s disinflation efforts.

However, the IMF stressed that Nigeria’s gains are cyclical and tied to favourable terms of trade rather than structural participation in the technology cycle. “Nigeria’s near-term gains are terms-of-trade gains, cyclical and reversible, not technology-cycle gains, which are proving more durable,” the report stated.

It urged reforms around AI readiness, digital infrastructure, power reliability, and human capital investment to ensure Nigeria can benefit from the more durable growth engine.

Risks remain tilted to the downside globally, with potential renewed conflict in the Middle East, accelerating trade fragmentation, or a correction in technology valuations threatening stability.

For Nigeria, renewed conflict could boost oil receipts but tighten global financial conditions, while a tech-driven equity correction would hit investor appetite and widen Eurobond spreads.

The IMF concluded that Nigeria’s reform-driven growth momentum is robust to current geopolitical shocks, but its durability depends on structural reforms. For investors, the environment favours maintaining exposure to Nigerian hard-currency debt while conflict de-escalation holds, with domestic real yields expected to remain attractive as the CBN stays cautious against stalled global disinflation.