Nigeria to Overtake Algeria as Africa’s Third-Largest Economy in 2026—IMF

By Adedapo Adesanya

Nigeria is projected to move from being the become the third-largest economy in Africa in 2026 from the fourth position it clinched last year, according to data from the International Monetary Fund (IMF).

In the IMF’s World Economic Outlook (October 2025 edition), accessed via its datamapper, it was indicated that Nigeria’s gross domestic product (GDP) at current prices stood at about $285 billion in 2025, placing it behind South Africa, Egypt and Algeria.

South Africa topped the African ranking with a GDP of about $426 billion, followed by Egypt at $349 billion, and Algeria ranked third with $288 billion.

However, the IMF forecasts that Nigeria will overtake Algeria in 2026 as economic output rebounds, driven by higher oil production, improved foreign exchange liquidity and the impact of ongoing economic reforms.

According to the IMF’s projections, Nigeria’s GDP is expected to rise to $334 billion, putting it ahead of Algeria ($284 billion) and making it Africa’s third-largest economy, behind South Africa ($443 billion) and Egypt ($399 billion).

The lender’s outlook reflects expectations that recent reforms, including petrol subsidy removal, exchange-rate liberalisation and fiscal adjustments, will support medium-term growth, despite short-term inflationary pressures.

Africa’s largest economy’s position has shifted in recent years amid currency devaluations, rebasing exercises and macroeconomic headwinds across major economies on the continent. Nigeria in 2024 lost its status as Africa’s largest economy and dropped to fourth place after a series of Naira devaluations and wider reforms.

However, these appear to have brought about macro reliefs in the near term. On January 19, the IMF reviewed its forecast for Nigeria’s economic growth rate upward to 4.4 per cent in 2026. The Bretton Woods organisation revised the rate upward from its initial projection of 4.2 percent.

Prior to that, on January 13, the World Bank also increased its projection for Nigeria’s economic growth rate for 2026 to 4.4 percent from the 3.7 percent forecast in June 2025.

The federal government expects the Nigerian economy to grow by 4.68 per cent in 2026, supported by easing inflation, improved foreign exchange stability and continued fiscal reforms.

According to the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, the country’s inflation, which peaked above 33 per cent in 2024, declined to 15.15 per cent by December 2025, adding that foreign exchange volatility has eased, with the Naira trading below N1,500 to the Dollar, while external reserves rose to $46 billion.

He added that GDP growth averaged 3.78 per cent by the third quarter of 2025, with 27 sectors recording expansion.