Higher prices may worsen Nigeria’s poverty, IMF warns

The International Monetary Fund (IMF) has issued a stark warning that escalating prices for essential goods could deepen poverty and exacerbate food insecurity in Nigeria. This concern arises even as the country experiences improvements in its macroeconomic stability. The IMF's July 2026 World Economic Outlook Update projects Nigeria's economy to grow by 4.1% in 2026 and 4.3% in 2027, but cautions that the rising cost of basic necessities might counteract gains from ongoing economic reforms.

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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.

According to the report, Nigeria benefits from improved macroeconomic conditions and favorable terms of trade. However, households remain susceptible to the increasing costs of living. The IMF noted that economic growth across sub-Saharan Africa is expected to remain stable at 4.3% in 2026, though performance will vary significantly among nations based on policy choices and external shocks. Oil-importing economies in the region are particularly vulnerable to rising energy and food prices.

Globally, the IMF forecasts economic growth of 3.0% in 2026 and 3.4% in 2027, a slowdown from the 3.5% average in 2024 and 2025. This deceleration is partly attributed to the economic fallout from the war in the Middle East. However, stronger technology investments, driven by artificial intelligence advancements, are expected to partially offset this impact. The Fund also highlighted that inflationary pressures have intensified due to higher energy prices, with global headline inflation projected to increase before declining in 2027.

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Global headline inflation is expected to increase from 4.1 percent in 2025 to 4.7 percent in 2026 before declining to 3.9 percent in 2027.

The IMF identified renewed geopolitical tensions as the most significant downside risk to the global economy. The possibility of a renewed conflict in the Middle East could lead to commodity price volatility, threaten supply chains, increase prices, and negatively affect financial conditions. The report projects higher energy prices contributing to this inflationary trend.

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The possibility of renewed Middle East conflict looms large and could extend commodity price volatility, further threaten supply chains, raise prices, and weigh on financial conditions.