World Bank Upgrades Nigeria’s Growth Outlook as Regional Economies Recover

The World Bank has upgraded its economic growth forecast for Nigeria, Ethiopia, and Ivory Coast, citing stabilising exchange rates, easing inflation, and improved investor confidence across Sub-Saharan Africa.

The upward revision follows the Central Bank of Nigeria’s (CBN) decision last month to cut interest rates from 27.5% to 27%, a move aimed at stimulating growth amid moderating inflation pressures.

In its latest Africa Pulse report, released on Monday, the World Bank raised its 2025 growth projection for Sub-Saharan Africa to 3.9%, up from 3.5% in April. The Bank expects the region’s growth to accelerate further to an average of 4.4% over the next two years, supported by stronger private consumption and investment.

“While this marks a gradual recovery from a decade of successive shocks, the rebound has yet to gain strong momentum,” the report stated.

Regional Recovery Gains Pace

According to the report, 30 out of 47 African economies saw growth upgrades, reflecting a broad-based recovery in economic activity. The Bank said improved macroeconomic stability — including falling inflation and stronger currencies — is helping to rebuild confidence.

“The median inflation is less than 4%. Moreover, most of the currencies that were cratering relative to the U.S. dollar have now recovered and are stable,” said Andrew Dabalen, World Bank Chief Economist for Africa.

The Bank also noted that policy reforms and fiscal adjustments in key economies are beginning to yield results, even as fiscal consolidation could slightly temper growth in some countries.

Challenges Remain

Despite the positive outlook, the report warned that trade uncertainty, high debt burdens, and youth unemployment remain significant risks. Dabalen pointed to uncertainty over U.S. trade policies and the potential expiry of the African Growth and Opportunity Act (AGOA) as key concerns.

“Trade challenges remain very high. We don’t know how this is going to be resolved because there are lots of negotiations going on,” he said.

The World Bank urged African governments to prioritise job creation through policies that support small and medium-sized enterprises (SMEs), enhance the business environment, and encourage private investment.

“These jobs have to be jobs that provide a living wage and secure lives,” Dabalen said, noting that three-quarters of jobs in Africa remain in the informal sector.

He added that rising youth-led protests in Kenya, Nigeria, and Madagascar highlight the urgency of addressing unemployment and social inequality.

“The consequences of not solving these problems are hard to contemplate. They will be very disruptive, and I think we’re beginning to see the signs of it,” Dabalen warned.