… Says Nigeria’s higher oil output expected to offset lower international oil prices
Monetary policy stances are likely to remain cautious, as Central Banks continue to balance the need to contain inflation with efforts to support economic growth, according to the World Bank Group.
In its latest report titled ‘Global Economic Prospects’, the World Bank said monetary authorities across developing economies are expected to maintain a careful and measured approach, even as growth prospects improve. The Bank noted that while inflation pressures are easing in some countries, they remain elevated enough to warrant prudence, particularly in economies that have only recently begun to stabilise.
For Nigeria, the World Bank projected that economic growth will strengthen to 4.4 percent in both 2026 and 2027, representing the fastest pace of expansion in more than a decade. This expected firming of growth is forecast to be driven by continued expansion in the services sector and a rebound in agricultural output, alongside a modest acceleration in non-oil industrial activity. The report added that ongoing economic reforms, including improvements to the tax system, combined with continued prudent monetary policy, are expected to support economic activity, improve investor sentiment, and help reduce inflation further.
The World Bank also noted that higher oil output is expected to offset lower international oil prices in the near term, providing support for fiscal revenues and strengthening Nigeria’s external balance. This, it said, should help cushion the economy against external shocks while authorities maintain cautious macroeconomic management.
According to the report, Nigeria’s growth edged up to 4.2 percent in 2025, reflecting a stronger performance in the services sector, particularly finance and information and communication technology. The expansion was also supported by a modest recovery in agriculture and Nigeria’s emergence as a net exporter of refined petroleum products, following increased domestic refining capacity.
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Beyond Nigeria, the World Bank projected that growth in Sub-Saharan Africa will firm to 4.3 percent in 2026 and 4.5 percent in 2027, supported by strengthening investment and exports. However, the Bank cautioned that this pickup in growth is dependent on the external environment not deteriorating further and on assumed improvements in security conditions materialising in several fragile and conflict-affected countries. Relative to June 2025 projections, growth forecasts for both 2026 and 2027 were revised upward by 0.2 percentage point.
Despite the improved outlook, the World Bank warned that projected growth rates for many Sub-Saharan African economies in 2026 and 2027 will remain about half a percentage point below their average growth between 2000 and 2019. It added that growth at these levels will be insufficient to create enough jobs to match the rapid expansion of the labour force or to raise real per capita incomes enough to significantly reduce extreme poverty.
The report noted that the region’s modest exposure to the United States markets is expected to limit the adverse impact of higher US import tariffs. Baseline projections assume that current bilateral tariff levels remain in place throughout the forecast period. However, the World Bank cautioned that tariff increases, including the possible expiration of the African Growth and Opportunity Act in late 2025 if not extended, could have a notable impact on some economies, especially those reliant on textile and vehicle exports, leading to significant output and job losses. Even so, continued progress in implementing the African Continental Free Trade Area is expected to further deepen regional trade integration and help offset some of these risks.
On the fiscal front, the World Bank said primary fiscal deficits across Sub-Saharan Africa are expected to narrow over the forecast horizon, reflecting improved budgetary discipline, including in non-resource-rich economies. However, rising interest burdens are projected to partly offset these improvements in primary balances. While public debt-to-GDP ratios are forecast to decline slightly, they are expected to remain elevated, necessitating continued fiscal consolidation that could weigh on demand.
The Bank added that government interest payments in Sub-Saharan Africa in 2026 are expected to remain well above the 2010 to 2019 average, reflecting a shift towards less concessional borrowing and the lagged effects of record debt accumulation following the COVID-19 pandemic. Increased reliance on riskier sources of financing, it said, could heighten vulnerability to currency, interest rate, and refinancing risks. Nonetheless, financing conditions have begun to improve, with several countries, including Angola, the Republic of Congo, Kenya, and Nigeria, regaining access to international capital markets.