The African Development Bank, in its latest African Economic Outlook 2025, projects that Nigeria will experience an average inflation rate of 24.7% in 2025, before significantly declining to 17.3% in 2026.
The report identifies inflation as one of the most urgent challenges facing Nigeria’s economy in the near term.
On Tuesday, Nigeria approved a new $500 million replenishment of the Nigeria Trust Fund (NTF) at the African Development Bank (AfDB), extending the facility for an additional 15 years.
The President of the AfDB, Dr. Akinwumi Adesina, announced this during his opening remarks at the ongoing AfDB Annual Meetings in Abidjan, expressing gratitude to President Bola Ahmed Tinubu and Vice President Kashim Shettima for their continued support.
Also, the Secretary-General of the United Nations, António Guterres, praised Adesina, for his transformative leadership and unwavering commitment to Africa’s development over the past decade.
The bank cautioned that continued fiscal and structural reforms are essential to maintain the downward trend in inflation.
Nigeria’s real GDP is forecast to grow by 3.2% in 2025, easing to 3.1% in 2026.
These projections mark a downward revision of 0.3 and 0.5 percentage points from earlier AfDB estimates, driven by global economic challenges, lower demand from key partners like the U.S. and China, and persistent financial market uncertainties.
The country’s current account surplus, which stood at an estimated 9.2 percent of GDP in 2024, was forecast to moderate to 4.7 per cent in 2025, and 3.9 percent in 2026 as global conditions tighten.
Nigeria’s fiscal deficit was projected to remain elevated, at four per cent of GDP in 2025 and –4.2 per cent in 2026, underscoring the need for stronger revenue mobilisation efforts.
The report highlighted that West Africa’s real GDP growth is projected to average 4.3% in both 2025 and 2026, slightly below previous estimates.
Nigeria, Ghana, and Sierra Leone are expected to grow under the regional five percent mark, while other countries in the region are poised to benefit from stronger domestic demand, increased oil and gas production—especially in Senegal and Niger—and greater value addition in agriculture.
The report stated, “Real GDP is projected to moderate to 3.2 per cent in 2025 and 3.1 per cent in 2026, as global uncertainty has increased.
“Services and industrial expansion will drive the economy as inflation moderates and higher oil production reaches 1.8 mbpd.
“Inflation is projected to moderate to 24.7 per cent in 2025 and 17.3 per cent in 2026, supported by tight monetary policy. The fiscal deficit is projected to remain at four per cent of GDP. The current account surplus is projected to narrow to 4.7 per cent of GDP in 2025 and 3.9 per cent in 2026, as imports start to normalise.
“The risks to the outlook include rising geopolitical tensions and greater policy uncertainty, volatile commodity prices, lower oil prices, slowdown in reform momentum, insecurity, and adverse weather events.”
