World Bank has praised Nigeria’s ongoing economic reforms, saying they are beginning to yield positive results in terms of growth, inflation control, and external stability.
Gatekeepers News reports that the World Bank also urged Federal Government to avoid using temporary oil revenue gains for subsidies or permanent spending increases.
In its latest Nigeria Development Update, the bank reported that Nigeria’s economy grew by about 4.0% in 2025, slightly below the 4.1% recorded in 2024, with growth largely driven by the services sector, including ICT, financial services, and real estate.
It noted that early 2026 indicators show continued expansion across key sectors despite global economic uncertainty linked to geopolitical tensions and rising energy costs.
On inflation, the World Bank said headline inflation fell significantly to 15.1% in February 2026, down from 26.3% a year earlier, while food inflation also declined, easing pressure on household incomes. However, it warned that recent global oil shocks are beginning to reverse some of these gains.
The report highlighted sharp increases in fuel prices, with petrol rising by about 45% between February and March and diesel climbing to nearly ₦1,800 per litre, raising fresh concerns about living costs and inflationary pressures.
Despite these challenges, Nigeria’s external position remained relatively strong, with a current account surplus of 4.8% of GDP and external reserves rising to $45.5 billion, supported by remittances and foreign portfolio inflows.
Fiscal performance showed a slight widening of the deficit to 3.1% of GDP in 2025, driven by higher federal recurrent spending and increased state-level capital expenditure, even as non-oil revenues improved.
Looking ahead, the World Bank projected Nigeria’s economy to grow by about 4.2% between 2026 and 2028, but warned that poverty reduction may remain slow due to weak job creation and rising living costs.
It stressed that sustaining reform momentum is essential for inclusive growth and called for stronger fiscal discipline, improved revenue mobilisation, and more efficient public spending.
The bank also advised the government to treat rising oil revenues as temporary windfalls, save excess earnings, and avoid expanding subsidies, recommending instead targeted, time-limited cash support for vulnerable households while maintaining tight monetary policy and exchange rate flexibility.
