The International Monetary Fund (IMF) has projected a 23 per cent inflation rate for Nigeria in 2025 and a further drop to 18 per cent in 2026.
In its Global Economic Outlook released yesterday at the ongoing IMF/World Bank Spring Meetings in Washington D.C, Division Chief, IMF Research Department, Daniel Leigh, said Nigeria is moving in the right direction with economic reforms and including exchange rate no contributed to surge in inflation rate in March to 33.2 per cent.
“We see inflation declining to 23 per cent next year and then 18 per cent in 2026”, Leigh said.
Continuing, Leigh said: “Growth in Nigeria, steady but actually rising this year, from 2.9 per cent last year to 3.3 per cent this year. We have seen an expansion from the recovery in the oil sector, with a better security situation and also improved agriculture, benefiting from the better weather conditions and the introduction of dry season farming.
“So, there’s a broad-based increase also in the financial sector, in the IT sector. Inflation, yes, it has increased. Part of this reflects the reforms, the exchange rate and its pass-through into other goods from imports to other goods. So, this explains also why we revised up our inflation projection for this year to 26 per cent. But with the tight monetary policies and that interest rate increase, significant interest rate increases during February and March”.
IMF Research Department, Pierre Olivier Gourinchas, said oil prices have been rising in part due to geopolitical tensions and services inflation remains stubbornly high in many countries. Nigeria has a six to nine per cent inflation target which has been missed by over a decade. But the Fund said bringing inflation back to target should remain the priority.
“There are stark divergences also between countries that call for careful calibration of monetary policy. Going forward, policymakers should prioritize measures that help preserve or even enhance the resilience of the global economy. A key priority is to rebuild fiscal buffers, especially in an environment with high real interest rates, modest growth, and elevated debts.
Unfortunately, planned fiscal adjustments are often insufficient and could be derailed further given the record number of elections this year”, Gourinchas said.
He said that global growth prospects are also harmed by rising geo-economic fragmentation.
“Trade linkages are already changing. Some economies could benefit from the reconfiguration of global supply chains, but the net effect may still be a loss of efficiency, making the global economy less, not more resilient, and the broader damage is to global cooperation”, Gourinchas said.
He said a great achievement of the past few years has been the strengthening of monetary, fiscal, and financial policy frameworks, especially for emerging market economies. This, he said, has helped make the global financial system more resilient and avoid a permanent resurgence in inflation. Going forward, it is essential to preserve these improvements, and that includes protecting the hard-won independence of central banks.
Meanwhile, the World Bank has called for investment in clean hydrogen, noting its potential as a game-changer in the global energy transition, particularly for Emerging Markets and Developing Countries (EMDCs) like Nigeria.
A new report titled “Scaling Hydrogen Financing for Development” emphasized the crucial role clean hydrogen can play in decarbonizing hard-to-reduce sectors, such as heavy industry, heavy-duty transport, and chemicals.
The report projects clean hydrogen as a major energy source by 2030 and identifies EMDCs as central to achieving global climate goals. The World Bank estimates that EMDCs have the potential to attract $100 billion annually in clean hydrogen investments between now and 2030, a significant increase from current levels.
This investment surge is projected to enable EMDCs to produce half of the world’s clean hydrogen by 2030, reaching a target of 20 million metric tons per annum.
“A global hydrogen economy holds the potential to reshape the energy landscape, offering a chance for sustainable economic growth in Emerging Markets and Developing Countries,” the report stated. It drew attention to the opportunity for EMDCs to become pioneers in this new clean energy value chain, attending to both domestic consumption and export markets.
The report recognized that several EMDCs have already formulated clean hydrogen strategies and roadmaps. However, it emphasized the need for well-aligned policies that complement these strategies.
Such policies the report noted should be designed to attract private sector financing and mitigate the risks associated with early-stage investments.
The report cites Saudi Arabia’s large-scale hydrogen project, scheduled for completion in 2026, as a prime example. Furthermore, it proposes the development of a series of “renewable hydrogen lighthouse projects” across EMDCs to boost investor confidence in the sector.
With regards to cost transparency as another key factor, the report identified the current production cost of clean hydrogen from renewable sources like wind and solar at $3 per kilogram but warned that this cost could rise under unfavorable conditions.
In light of this, the World Bank encouraged EMDCs to implement policies that mitigate risks and incentivize private sector investment in clean hydrogen production.
The report underscored the global shift towards clean energy solutions, driven by the urgency of combating climate change. This transition has significant implications for economies like Nigeria, where oil serves as a major source of income.
However, the report also points to the proactive approach taken by Saudi Arabia, a major oil producer that is heavily investing in clean hydrogen to ensure a smooth transition into a future energy landscape.
