Post by Ibadan Watch (@Ibadanwatch)
IMF Says Inflation Is Undermining Nigeria’s Poverty Reduction Efforts.
The International Monetary Fund has warned that rising prices of essential goods could deepen poverty and worsen food insecurity in Nigeria despite recent improvements in the country’s macroeconomic stability.
The warning was contained in the IMF’s July 2026 World Economic Outlook Update, which projected that Nigeria’s economy would grow by 4.1 per cent in 2026 and 4.3 per cent in 2027, while cautioning that higher prices for basic necessities could offset some of the gains from ongoing economic reforms.
According to the Fund’s report released on Wednesday, Nigeria has continued to benefit from improved macroeconomic stability and stronger terms of trade, but households remain vulnerable to rising living costs.
The report read, “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 IMF noted that growth across sub-Saharan Africa was expected to remain broadly stable at 4.3 per cent in 2026, although performance would vary widely among countries depending on policy choices, reform implementation and exposure to external shocks.
It said oil-importing and non-resource-intensive economies in the region were likely to suffer more from rising energy and food prices, while some larger economies had benefited from earlier stabilisation efforts despite facing weaker official development assistance and missing out on much of the artificial intelligence-driven global technology boom.
The Fund retained its forecast for Nigeria’s economic growth at 4.1 per cent in 2026, unchanged from its April outlook, before projecting a further increase to 4.3 per cent in 2027.
The IMF projected global economic growth of 3.0% in 2026 and 3.4% in 2027, down from 3.5% in 2024 and 2025. The slowdown stems from the Middle East war, but AI-driven tech investment could offset some effects.
The Fund warned that inflation pressures are intensifying with higher energy prices, expecting global inflation to rise from 4.1% in 2025 to 4.7% in 2026 and fall to 3.9% in 2027, noting disinflation has stalled.
Geopolitical tensions remain the main downside risk, potentially increasing commodity volatility, disrupting supply chains, and raising prices. Higher energy costs are expected to push food prices; crude oil up 32% in 2026, natural gas 22%, and fertiliser 26%, with food prices rising 8%.
Food insecurity could worsen if energy and fertiliser disruptions continue, especially in low-income regions. The IMF advised against broad fuel subsidies, tax cuts, and price controls, recommending targeted aid for vulnerable groups and maintaining efforts to restore price stability.
It urged countries to rebuild fiscal buffers, improve tax collection, and expand social programs to manage rising costs while maintaining debt sustainability.
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