World Bank Cuts Sub-Saharan Africa Growth Forecast, Says Nigeria Benefits From Oil Prices
The World Bank lowers Sub-Saharan Africa’s growth outlook but says higher oil prices support Nigeria’s economy.
The World Bank lowers Sub-Saharan Africa’s growth outlook but says higher oil prices support Nigeria’s economy.
The World Bank’s latest forecast has projected that growth in Sub-Saharan Africa (SSA) would edge down to 4.0 per cent in 2026 and then recover to 4.4 per cent on average in 2027 and 2028.
It also projected that real per capita GDP growth in SSA would remain at 1.6 per cent in 2026, before firming to an average of 2.0 per cent per year in 2027 and 2028, which is still insufficient to deliver substantial reductions in extreme poverty.
The World Bank also said that higher energy prices will benefit oil exporters, particularly Angola and Nigeria while non-oil-exporting economies, on the other hand, will face higher fuel, fertiliser, and transport costs, driving up inflation, especially food prices.
It said that rising government debt poses a key challenge for EMDEs, as it leads to higher interest rates, higher debt-service
payments, and a greater likelihood of debt distress.
Debt levels are positively associated with dollar-denominated sovereign bond spreads and domestic-currency government bond yields.
The forecast is contained in the June edition of the World Bank’s “Global Economic Prospects,” which stated that “the growth forecast for 2026 has been revised down by 0.3 percentage point since January, with the negative impact of the conflict in the Middle East expected to outweigh existing growth drivers—including structural reforms and recent trade agreements that support investment and exports.”
“The outlook assumes that the geopolitical environment stabilises in the near term and that security improves in economies in Fragile and Conflict-affected Situations (FCS) in the region.
“Though the impact of the conflict in the Middle East, operating through higher commodity prices and weaker external demand, is expected to be overwhelmingly negative, it will be heterogeneous across SSA economies.
“Higher energy prices will benefit oil exporters, particularly Angola and Nigeria. Non-oil-exporting economies, on the other hand, will face higher fuel, fertiliser, and transport costs, driving up inflation, especially food prices.
“Consequently, growth in non-oil-exporting economies is expected to be markedly lower than anticipated, as elevated consumer prices and input costs are set to dampen consumption and raise production costs.”
The bank said that limited fiscal resources are restricting efforts to manage rising energy and food prices across many SSA economies, notwithstanding the improved fiscal positions and buffers in recent years.
It said that monetary policy is expected to remain tight because of inflation concerns and limited scope to look through inflation shocks.
“Despite overall progress in improving fiscal credibility, high borrowing costs, reduced concessional financing, and declining Official Development Assistance (ODA) are also set to add to fiscal challenges in SSA, especially for economies that have been slower to improve policy frameworks,” the report said.
It added that structural reforms and recent trade policy changes will only partly offset global headwinds.
“In South Africa, reforms include improved energy availability, whereas in Ethiopia and Nigeria, they include exchange-rate liberalisation, improvements in public financial management, and other business friendly measures.”
The report said that though commodity prices are projected to increase significantly, “weaker external demand and the impact of higher prices on consumption mean that growth for industrial commodity exporters will only edge up from 3.1 per cent in 2025 to 3.2 percent in 2026, and an annual average of 3.5 percent in 2027–28.
“Indeed, the impact of the conflict in the Middle East has led to downward revisions, especially in Nigeria and South Africa, where structural constraints continue to limit growth.
“Non-resource-rich economies are expected to see growth slow from 6.4 percent in 2025 to 5.7 percent in 2026, and then average 6.2 percent over 2027–28, though still outpacing commodity exporters.
“Ethiopia’s growth is expected to be driven by reforms in monetary policy and the financial sector, despite external challenges.
“Notably, growth forecasts have been lowered for Uganda as a result of oil project delays, for Senegal amid revelations of hidden debt and the subsequent freezing of funding from the International Monetary Fund (IMF), and for Côte d’Ivoire on account of falling cocoa prices.”
The report said that food insecurity in economies in FCS is set to remain at the highest levels since the early 2000s, while it is projected to increase in economies not in FCS.
“The decline in ODA is also likely to adversely affect living standards and deepen humanitarian and health crises, such as the recent Ebola outbreak,” the report said.
