IMF, Cardoso isolate Nigeria from global uncertainty, raise growth prospect

Against the backdrop of global uncertainty, the International Monetary Fund (IMF), yesterday, marked up Nigeria’s economy, raising its growth prospect for this year by as much as 0.5 per cent and next year by one per cent.

In its October World Economic Outlook (WEO) released yesterday at the ongoing World Bank/IMF Annual Meetings being held in Washington, DC, the Fund said Nigeria’s economy could grow by 3.9 per cent and 4.2 per cent through next year on account of positive domestic economic factors and the country’s limited exposure to the United States’ high tariffs.

Last quarter, the economy expanded by 4.23 per cent in the second quarter, raising the confidence that the country could surpass last year’s growth by a reasonable margin.

The IMF, the World Bank and other international development institutions have given the macroeconomic prospect a top-up even though they admitted that more needed to be done to reduce rising poverty, increase purchasing power and give ordinary citizens a fair chance to enjoy the outcome of the economic reforms.

The generous marker comes amidst rising uncertainty about the economic prospect, which the IMF said needs to be resolved to raise the speed of global average growth estimated at 3.2 per cent this year.

A reasonably lower uncertainty, lower tariffs and artificial intelligence (AI) deployment, under modest assumptions, IMF said, could raise global output by about one per cent in the near-term.

Despite the bullish sentiment, Nigeria’s growth prospect is still behind that of emerging markets and developing economies (EMDEs), which is pegged at 4.2 per cent in the year but expected to slow to four per cent next year.

But the Central Bank of Nigeria (CBN) Governor, Yemi Cardoso, was confident that better days are ahead for the country. Cardoso, who stood in for the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, at the G24 Press Conference, said the post-market liberalisation naira has become very competitive, giving the economy an edge in an economy reeling in uncertainty.

“I think we were very fortunate because a lot of the things that needed to be done, we did them much earlier. As a result, we were able to create resilience and buffers against potential shocks,” Cardoso told the gathering.

“In terms of anchoring expectations, we found that those who followed the Nigerian economy were fairly comfortable. For us, again, oil is basically the only commodity that was so exposed and the impact on that was relatively modest.

“For once, we have a situation where we have a positive balance of trade, a trade surplus, and we expect it to be around six per cent of GDP and remain in that range for some time,” the governor added.

The G-24 Press Conference might have set the tone for Nigeria’s pitch in the week, with Cardoso, who leads the Nigerian delegation, expected to hold critical meetings with investors and other stakeholders on the country’s competitiveness.

The current administration has played up the role of economic reforms in removing market rigidities, which have previously held back investors from participating in the economy.

The IMF also identified the reform as a major addition to the bright prospect of the economy. Other factors it listed are a rise in oil production, improved investor confidence, a supportive fiscal stance and limited exposure to higher U.S. tariffs.

It emphasised that the output rebasing exercise went beyond dedicated sectoral studies, drawing more comprehensive data coverage of household and informal sector activity.

The National Bureau of Statistics (NBS) said the data were the National Business Sample Census, the Survey of Establishments, the National Agricultural Sample Census and Survey, and the 2019 and 2023 Nigeria Living Standards Surveys.

The IMF warned that the impending end of the African Growth and Opportunity Act (AGOA) could have severe repercussions for developing countries. The uncertainty has already led to the downgrade of several low-income countries.

The IMF stated that many other economies are experiencing significant downward revisions in their growth projections due to the evolving international trade landscape and the changing official aid landscape.

Many low-income countries in sub-Saharan Africa benefited from preferential access to the US market under the AGOA, which expired in September. The Fund anticipated that the cessation of this preferential access would have substantial negative effects, particularly on Lesotho and Madagascar.
On the global economic front, the report predicts a decline in the prices of fuel commodities in 2025 by 7.9 per cent and in 2026 by 3.7 per cent.

The report attributed the decline to a decrease in oil prices, although the rate of decline is slower than anticipated in the April 2025 WEO. The oil futures curve indicates that the petroleum spot price index is projected to average $68.9 per barrel this year and decrease to $67.3 by 2030.

Oil prices have remained within the $60-$70 range established since the commencement of the accelerated production schedule of OPEC+. Barring a temporary spike related to the Israel-Iran conflict in mid-June, the price range is expected to remain.

The world’s poorest economies, particularly those facing prolonged conflicts, are particularly susceptible to experiencing a slowdown in their growth momentum, widening the income gap between these economies and advanced countries, the report noted.

This decline in financing flows to the economies has been significant, primarily due to reductions in grants and concessional lending, as well as a substantial increase in reliance on commercial creditors for external financing.

Prolonged uncertainty, increased protectionism and labour supply shocks are the thematic focus of the meetings, with the outlook report already picking the issues as growth drag.

Fiscal vulnerabilities, potential financial market corrections and erosion of institutions, resulting from the challenges, could threaten stability, the Fund warned.

It called for policymakers to restore confidence through credible, transparent and sustainable policies. Whereas the U.S. has not shown signs of backing down on the tariff war, the IMF has urged trade diplomacy alongside macroeconomic adjustment, advocating the rebuilding of fiscal buffers, preservation of central bank autonomy and the redoubling of efforts on structural reforms.

Yesterday, the Managing Director of the IMF, Kristalina Georgieva, cautioned countries against rising debts, which she said are suffocating economies.

At the Civil Society Organisation (CSO) Town Hall, Georgieva urged countries to prioritise reducing their debt burdens. This call comes on the heels of rising concern about Nigeria’s continual reliance on borrowing to fund its obligations, including past debt repayment.

The IMF chief emphasized the need for a more focused approach to reducing debt levels, stating that very high levels of debt could suffocate economies.

Georgieva acknowledged that debt levels are declining in low-income economies, but she attributed the decline to a lack of access to financing. Despite this, she acknowledged that low-income countries are struggling to manage their debt burdens. The Guardian