The International Monetary Fund (IMF) has upgraded its growth outlook for several of Africa’s largest economies, including Nigeria and Egypt, signalling rising confidence in the continent’s medium-term recovery despite lingering global risks.

In its January 2026 World Economic Outlook update, titled Global Economy: Steady amid Divergent Forces, the IMF raised Nigeria’s growth forecast for 2026 to 4.4%, up from 4.2% projected in October, citing improving macroeconomic conditions and reform momentum.

Nigeria’s economy is projected to expand steadily from 4.1% in 2024 to 4.2% in 2025, before accelerating to 4.4% in 2026. Growth is then expected to ease slightly to 4.1% in 2027, potentially reflecting uncertainties surrounding the upcoming Nigerian elections.

Nevertheless, the upward revision underscores growing confidence in the country’s recovery, supported by recent policy adjustments and ongoing reform momentum

The Fund identified energy prices as a key factor shaping Nigeria’s outlook. It projects that energy commodity prices will decline by about 7% in 2026, as a result of weak global demand.

However, oil prices are expected to be supported by what the IMF described as a “soft price floor”, underpinned by coordinated output management by OPEC+ and increased crude stockpiling by China.

That dynamic is expected to limit downside risks for oil exporters such as Nigeria, even as demand remains uneven.

Regional picture and South Africa’s constraints

South Africa, however, remains the weak link among Africa’s major economies, with slow growth underscoring the drag from long-standing structural bottlenecks.

The IMF revised South Africa’s 2026 growth forecast slightly higher to 1.4%, from 1.2%, with growth expected to edge up to 1.5% in 2027.

While the upgrade offers modest relief, the outlook remains well below the pace needed to meaningfully reduce unemployment and inequality.

The Fund said South Africa’s growth ceiling remains constrained by domestic factors, including persistent electricity shortages, weak logistics performance, infrastructure backlogs and policy uncertainty, which continue to weigh on private investment and productivity.

These domestic challenges are further compounded by external risks, including trade frictions with the United States, South Africa’s largest export market, which could weigh on export competitiveness and limit the benefits of resilient global demand.

Egypt’s outlook strengthened

In North Africa, the IMF raised its forecast for Egypt’s real GDP growth in the 2025/2026 fiscal year to 4.7%, up from 4.5% previously projected.

Growth is expected to accelerate further to 5.4% in FY2026/2027, reflecting improved macroeconomic stability and the impact of recent reforms.

Global backdrop and risks

Globally, the IMF expects the world economy to grow by 3.3% in 2026 and 3.2% in 2027, supported by technology investment, accommodative financial conditions and private-sector adaptability, even as trade policy uncertainty persists.

Global inflation is projected to ease further, falling to 3.8% in 2026, though the IMF warned that risks to the outlook remain tilted to the downside.

These include escalating geopolitical tensions, renewed trade protectionism, high public debt levels and potential reassessment of technology-driven growth expectations. (Business Insider Africa)

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