Rising cost of essentials to push more Nigerians into poverty, IMF

The International Monetary Fund (IMF) has issued a stark warning regarding Nigeria's economic outlook, predicting that escalating prices for essential items will exacerbate poverty and food insecurity. This comes despite the IMF maintaining its growth forecasts for Nigeria's Gross Domestic Product (GDP) at 4.1% for 2026 and 4.3% for 2027, attributing this stability to improved macroeconomic conditions.

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

The IMF's July 2026 World Economic Outlook Update also revised down global economic growth projections. It anticipates a slowdown to 3.0% in 2026, a decrease from the 3.5% average expected for 2024 and 2025. This global revision is influenced by the ongoing Middle East conflict and the uneven distribution of benefits from the artificial intelligence (AI) boom.

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Global growth is projected to be 3.0 percent in 2026 and 3.4 percent in 2027, down from the average of 3.5 percent observed in 2024–25.

For Nigeria and the broader Sub-Saharan Africa region, the IMF projects growth to remain stable at 4.3% in 2026. However, this figure masks significant variations among countries, dependent on policy space, reform implementation, and exposure to external shocks. The report notes that while some larger economies benefit from stabilization efforts, they are largely excluded from the AI-driven technological surge and face headwinds from reduced official development assistance.

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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.

Globally, headline inflation is forecast to climb from 4.1% in 2025 to 4.7% in 2026 before settling at 3.9% in 2027, indicating a stall in the previous disinflationary trend. The IMF highlighted key risks, including the potential for renewed Middle East conflict to disrupt commodity prices and supply chains, and the acceleration of trade fragmentation, which could harm output and increase prices. The fund urged governments to focus on restoring price stability, rebuilding fiscal buffers, and implementing structural reforms for energy security, AI readiness, and international cooperation.

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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.