World Bank Cuts Nigeria’s 2026 Growth Forecast to 4.1% Despite Crude Rally

The World Bank has trimmed Nigeria’s 2026 growth forecast to 4.1 per cent — 30 basis points below its January projection of 4.4 per cent — warning that long‑standing structural constraints will limit the country’s ability to translate higher oil prices into faster expansion.

In its latest World Economic Prospects report, the Bank acknowledged that global crude prices, which have risen by more than 40 per cent since early March, could bolster government revenues and export earnings. However, it said persistent domestic weaknesses — notably power shortages, poor infrastructure, import dependence, foreign‑exchange vulnerabilities and heavy debt‑servicing obligations — will curb the economy’s upside.

“The authorities’ reforms, including exchange‑rate liberalisation and improved public financial management, have strengthened macroeconomic fundamentals and boosted investor confidence,” the Bank said. “But these gains are being offset by external shocks linked to the Middle East conflict and other global developments.”

The World Bank expects growth to edge up to 4.2 per cent in 2027 and 4.3 per cent in 2028. It also trimmed next year’s forecast for Nigeria by 0.2 percentage points.

Sub‑Saharan Africa outlook

The Bank applied a similar downgrade to sub‑Saharan Africa (SSA), lowering its regional growth forecast by 0.3 percentage points to 4.0 per cent for 2026, with a rise to 4.4 per cent in 2027. Ethiopia is projected to remain the region’s fastest‑growing economy, with its 2026 forecast upgraded by 0.9 percentage points to 8.0 per cent, after expansions of over 7 per cent last year.

Global risks and inflation

The World Bank said ongoing geopolitical tensions threaten to shave global growth to about 2.5 per cent — the weakest pace since the COVID‑19 pandemic — by pushing up energy and food prices, accelerating inflation and tightening financing conditions. The report highlights disruption from the closure of the Strait of Hormuz as a key driver reducing oil supplies and raising commodity market uncertainty.

On that basis, Brent crude is forecast to average about $94 per barrel in 2026, a 36 per cent rise from 2025, assuming supply disruptions ease from July. Rising fertiliser prices will add upward pressure on food costs, especially in import‑dependent SSA economies. The Bank projects global inflation will average roughly 4.0 per cent in 2026, up from 3.3 per cent in 2025.

Oil sector constraints

Despite higher prices, the Bank noted that Nigeria’s oil production remains constrained by underinvestment and theft. Production recently broke the 1.5 million barrels per day mark, still well below the budgeted target of over 2.0 mbpd.

Implication for policy

The World Bank’s assessment suggests that while higher oil revenues provide some fiscal relief, structural reforms and investments — particularly in power and infrastructure — remain crucial to attract private investment, improve competitiveness and sustain stronger growth.