IMF: Nigeria to become Africa’s third-largest economy by 2026

Nigeria is projected to regain its position as Africa’s third-largest economy by 2026, according to new data released by the International Monetary Fund (IMF), marking a significant recovery after years of economic decline.

The IMF’s latest projections indicate that South Africa will remain the continent’s largest economy with an estimated nominal GDP of $443.64 billion, followed by Egypt at $399.51 billion, while Nigeria is expected to trail closely with $334.34 billion.

The development represents a turnaround for Nigeria, which had slipped from first to fourth place in recent years due to the effects of prolonged fiscal instability, weak reforms, and external shocks.

Despite not featuring among Africa’s fastest-growing economies—such as Benin, Côte d’Ivoire, Ethiopia, Rwanda, and Uganda—Nigeria’s rebound has been driven by stronger fiscal reforms, the removal of fuel subsidies, efforts to stabilise the naira, and gradual improvements in oil production.

Speaking during the launch of the IMF’s Regional Economic Outlook for Sub-Saharan Africa, the Fund’s African Department Director, Abebe Selassie, said growth across the region is expected to stabilise at 4.1 per cent in 2025, with a modest uptick anticipated in 2026.

“Six months ago, our assessment highlighted that the region’s growth exceeded expectations last year,” Selassie noted.

“However, global headwinds—such as weaker demand, softer commodity prices, and tighter financial conditions—continue to test Africa’s recovery and resilience.”

He added that the projected growth reflects ongoing progress in macroeconomic stabilisation and reform efforts across key economies, including Nigeria.

While the IMF forecasts Nigeria’s economy to expand by 3.9 per cent in 2025, it cautioned that challenges such as high inflation, foreign exchange volatility, and productivity bottlenecks could weigh on recovery.

The IMF emphasised that Nigeria’s economic reforms must translate into sustained growth, improved competitiveness, and tangible improvements in living standards if the country hopes to consolidate and strengthen its new position.