WEF Warns Of New Inflation Shock For Nigeria, Others

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LAGOS – Nigeria and other sub-Saharan African economies are facing the prospect of renewed inflationary pressures and slower economic growth as the escalating conflict in the Middle East and the clo­sure of the critical Strait of Hor­muz threaten to unleash fresh shocks across the global econo­my, the latest Chief Economists’ Outlook released by the World Economic Forum has warned.

The report identifies sub-Sa­haran Africa as one of the re­gions most vulnerable to the emerging crisis, with chief economists ranking the region as having the highest inflation expectations globally over the next 12 months.

For Nigeria, which relies on imports of refined petroleum products, industrial inputs, ma­chinery, food items and other consumer goods, the prospect of rising energy costs and renewed disruptions to global supply chains could complicate efforts to stabilise inflation and sustain economic growth.

The warning comes at a time when the country is still grap­pling with elevated living costs, exchange-rate pressures and the lingering impact of economic reforms.

According to the report, nearly nine out of every 10 chief economists surveyed now expect global growth to weaken over the next year, marking a sharp rever­sal from the cautious optimism that prevailed at the beginning of 2026.

The deteriorating outlook has been driven largely by the escalat­ing Middle East conflict and the closure of the Strait of Hormuz, one of the world’s most import­ant energy transit routes through which a substantial portion of global crude oil and liquefied natural gas supplies pass.

Economists surveyed by the World Economic Forum believe the current disruption is already more damaging to the global economy than last year’s tariff-re­lated trade tensions.

Should the closure persist into the second half of the year, respondents warned that the economic consequences could approach the severity of the dis­ruptions witnessed during the COVID-19 pandemic, affecting supply chains, energy markets, food prices and investment flows worldwide.

An overwhelming 94 percent of chief economists expect global inflation to rise over the coming year, a development that could have significant implications for developing economies such as Nigeria.

Higher global energy prices would likely translate into in­creased transportation, manufac­turing and logistics costs, while rising food prices could further worsen inflationary pressures across the continent.

For sub-Saharan African countries that are net importers of refined petroleum products and essential goods, the combi­nation of higher import costs and currency pressures could inten­sify fiscal and monetary policy challenges.

The report noted that inflation expectations in sub-Saharan Af­rica have climbed more sharply than in any other region sur­veyed, underscoring concerns about the region’s vulnerability to external economic shocks.

Managing Director of the World Economic Forum, Saadia Zahidi, said the conflict has dra­matically altered the economic outlook in a matter of months.

“Only months ago, the Chief Economists community was cau­tiously optimistic. The conflict in the Middle East changed that, and the economic scarring from the situation thus far is already expected to last into the months ahead,” Zahidi said.

She warned that prolonged disruptions would disproportion­ately affect lower-income coun­tries and vulnerable populations.

“The longer the disruption lasts, the heavier the long-term cost for those who can least afford it,” she added.

While sub-Saharan Africa grapples with inflation concerns, the report revealed that the Mid­dle East and North Africa region is expected to suffer the most severe growth impact from the crisis.

The region, which only months ago was viewed as one of the brightest prospects for global economic expansion, has experi­enced the sharpest deterioration in sentiment among surveyed economists.

About 88 percent of respon­dents now expect weak or very weak economic growth in the re­gion, reflecting the direct effects of geopolitical instability, declin­ing investor confidence and dis­ruptions to trade and investment.

Europe is also facing mount­ing economic risks.

The survey highlighted grow­ing fears of stagflation across the continent, where weakening eco­nomic growth is occurring along­side rising inflation expectations. Such a scenario could complicate policy decisions for governments and central banks already strug­gling to support growth while controlling prices.

In contrast, the outlook for the United States and India remains comparatively positive.

According to the report, strong domestic demand, con­tinued investment activity and relatively resilient economic structures are expected to help both countries withstand some of the adverse effects of the global slowdown.

Despite the worsening out­look, the survey does not indicate an imminent global recession.

Most chief economists do not expect the world economy to enter a recession over the next 12 months, although they ac­knowledge that global resilience remains fragile and heavily de­pendent on the duration of the current geopolitical disruption.

The report suggests that a shorter disruption could allow economies to recover relatively quickly, while a prolonged clo­sure of the Strait of Hormuz would significantly deepen eco­nomic strains across regions.

Financial markets are also expected to face increasing tur­bulence.

Nearly 79 percent of chief economists surveyed anticipate higher volatility in private debt markets over the next year as concerns emerge about stress within the rapidly expanding private credit sector.

In addition, 74 percent expect greater volatility in public debt markets, while 68 percent foresee increased fluctuations in global equity markets.

The prospect of heightened market volatility could have implications for emerging econ­omies such as Nigeria, where governments and businesses of­ten rely on international capital flows to finance investments and development projects.

Beyond the immediate con­cerns surrounding growth and inflation, the report identified artificial intelligence as a con­tinuing source of economic op­portunity.

A significant 92 percent of chief economists expect AI adop­tion to increase over the coming year, reinforcing expectations that the technology will contin­ue transforming industries and business models globally.

However, economists have become more cautious about the speed at which AI will generate substantial productivity gains.

Compared with their expecta­tions earlier in the year, respon­dents now believe it will take lon­ger for many industries to realise significant productivity improve­ments from AI deployment.

The most pronounced delays are expected in sectors such as engineering, construction, healthcare, utilities and care ser­vices, while expectations remain unchanged for information tech­nology and education.

For Nigeria and the broader sub-Saharan African region, the report presents a mixed picture of rising risks and emerging op­portunities.

While accelerated AI adop­tion could create new pathways for innovation and productivity growth, immediate concerns remain focused on inflation, energy costs and the economic consequences of escalating geo­political tensions.