World Bank forecasts inflation drop to 22% if CBN maintains tight monetary policy
By Mathew Dennis
The World Bank has forecast that Nigeria’s inflation rate could fall to an average of just over 22 percent in 2025, provided the Central Bank of Nigeria (CBN) sustains its current policy of monetary tightening.
This outlook was presented at the launch of the latest Nigeria Development Update (NDU) in Abuja on Monday.
Taimur Samad, the World Bank’s Country Director for Nigeria, shared a cautiously optimistic assessment of the country’s economic trajectory, pointing to recent improvements in macroeconomic indicators driven by policy reforms.
“There is a lot to be encouraged about in Nigeria. Growth is up. The exchange rate now reflects market realities and has become more stable. Foreign reserves have seen an uptick. The fiscal position has improved significantly, supported by a rise in federation revenues,” Samad said. “But the war is not won.”
He cautioned that, despite these gains, inflation remains “high and sticky,” and stressed that it would be essential for the CBN to maintain its firm monetary policy stance.
“If the CBN continues on this path, as we expect it will, we foresee inflation easing to an average of just over 22 percent in 2025. That would be a significant milestone,” he added.
The May 2025 edition of the NDU places a strong focus on the importance of inclusive growth, particularly for vulnerable groups. It builds upon themes from the October 2024 edition, which concentrated on employment issues.
In addition to inflation and fiscal matters, the World Bank urged the Nigerian government to expand its macro-fiscal reform efforts and shift towards a growth strategy led by the private sector, with support and facilitation from public institutions.
This model, Samad explained, would allow the private sector to generate more productive employment, while the public sector takes responsibility for creating an enabling environment through infrastructure, regulation, and innovation support.
The report also warned that the continued scarcity of productive job opportunities poses a threat to inclusive growth, poverty alleviation, and long-term national stability.
Samad concluded by describing the Nigeria Development Update as more than just a collection of data and projections. “It is a tool for collective reflection and action,” he said.
Published twice a year, the NDU is a flagship World Bank report that provides detailed analysis of Nigeria’s economic conditions, policy performance, and forward-looking assessments.
