As Fiscal Deficit Widens, IMF Projects Nigeria’s Investment at 20% of GDP

Nume Ekeghe The International Monetary Fund (IMF), has predicted that Nigeria’s total investment will rise to 20 per cent of Gross Domestic Product (GDP) in 2026, its highest level since 2020, even as the country’s fiscal deficit is expected to widen, highlighting the contrasting outlook for investment activity and government finances. According to the, Nigeria’s total investment will increase from 17.76 per cent of GDP in 2025 to 19.97 per cent in 2026, before rising further to 20.19 per cent in 2027. The projected recovery followed three consecutive years of declining investment, from 21.06 per cent of GDP in 2020 to 19.23 per cent in 2021, 18.10 per cent in 2022, 17.55 per cent in 2023 and 16.78 per cent in 2024. However, the anticipated improvement comes alongside pressure on public finances, with the IMF projecting Nigeria’s fiscal deficit to widen from 1.76 per cent of GDP in 2025 to 3.30 per cent in 2026. The primary balance, which excludes interest payments, is also expected to move from a surplus of 0.81 per cent of GDP to a deficit of 0.96 per cent over the same period. Despite this, government gross debt is projected to decline from 36.1 per cent of GDP in 2025 to 34.6 per cent in 2026. On the broader economic outlook, the IMF projects real GDP growth of 4.2 per cent in 2026, compared with 4.0 per cent in 2025, while non-oil growth is expected to reach 4.19 per cent. Nigeria’s economy is also projected to expand to $386.67 billion in nominal dollar terms, from $290.49 billion in 2025. The external sector is expected to record further improvement, with the current account surplus projected to rise from $14.04 billion in 2025 to $27.20 billion in 2026, equivalent to seven per cent of GDP. Meanwhile, average inflation is projected to moderate to 15.6 per cent in 2026, from 23 per cent in 2025, although end-of-period inflation is expected to edge up slightly from 15.2 to 15.4 per cent. The IMF also projected that Nigeria’s population will increase from 237.58 million in 2025 to 242.58 million in 2026, while real GDP per capita growth is expected to remain modest at 2.05 per cent. In purchasing power parity terms, Nigeria’s GDP is projected to reach $2.44 trillion in 2026, representing 1.09 per cent of global output, while PPP GDP per capita is estimated at $10,051.