Economy 2026: From Crisis to Comeback
Economic Outlook for Nigeria in 2026
Nigeria's economy is entering 2026 with a sense of cautious optimism, moving from a period of post-reform stabilization to a phase of modest recovery. While there are signs of progress, the country still faces significant challenges that must be addressed to ensure long-term stability and growth.
Macroeconomic indicators have shown improvement, but translating these into tangible benefits for households remains a critical task. This will be essential in maintaining public confidence and ensuring sustained economic momentum. The International Monetary Fund (IMF) forecasts that Nigeria’s GDP will grow by 3.9% in 2025 and rise to 4.2% in 2026, placing the country as Africa’s third-largest economy with a nominal GDP of approximately $334 billion.
The Centre for the Promotion of Private Enterprise (CPPE) supports this outlook, projecting a 4.0-4.5% growth in 2026. This growth is expected to be driven by non-oil sectors such as services, telecommunications, finance, construction, real estate, and trade, which accounted for 53% of GDP by the third quarter of 2025. Fitch Ratings also anticipates a 4.3% GDP growth rate, supported by a rebound in domestic demand, easing inflation, and slight gains in oil production to 1.73 million barrels per day.
Inflation has significantly declined, dropping from 24.48% in January 2025 to 14.45% by November. This improvement is attributed to naira stability and improved supply chains. However, the African Development Bank projects an average inflation rate of 17.3% for 2026, which is expected to decrease to around 14% by year-end. Interest rates may also ease gradually, with the Central Bank of Nigeria (CBN) having already cut the Monetary Policy Rate by 50 basis points to 27% in September 2025. Further reductions to 24% or even 12.5% are possible if inflation continues to moderate, potentially spurring private investment.
The naira has stabilized within the N1,440-N1,500/$ range, bolstering business confidence. Foreign exchange reserves reached a five-year high of $45.24 billion by late 2025, with projections indicating a range of $40-55 billion in 2026, offering nearly 11 months of import cover. Despite these positive developments, rising debt levels remain a significant risk. Debt service obligations are expected to exceed N15 trillion in the 2026 budget of N58.18 trillion, accounting for about 50% of projected revenue. This constrains fiscal space after oil revenue shortfalls, with actual oil prices hovering at $66 per barrel for 2025 compared to the budgeted $75, while oil production remained muted at an average of 1.66 million barrels per day.
Most investment banks and the Energy Information Administration (EIA) forecast that average oil prices will fall below $60 per barrel in 2026 due to an emerging and persistent market oversupply. This presents a challenge for Nigeria’s economic outlook.
Despite these challenges, Nigeria has shifted from “risk watch” to “recovery watch,” as noted by Femi Awoyemi, Chairman of Proshare, during the 2026 Economic Outlook Conference. This shift is marked by Nigeria’s exit from the FATF grey list, credit rating upgrades from S&P, Moody’s, and Fitch, FX reforms, and positive readings on the NESG-Stanbic IBTC Business Confidence Index.
CPPE’s Director-General, Muda Yusuf, describes 2026 as a “turning point,” with reform momentum enabling decisive growth if security improves and pre-election fiscal discipline holds. However, VerivAfrica highlights that most of 2025’s stabilisation was due to exchange rate liberalization and subsidy removal, though high energy costs, insecurity, and bureaucracy remain as bottlenecks stifling further growth.
Analysts project that growth areas in 2026 will include the digital economy, with revenues up to $18.3 billion via fintech and AI; services, which remain a primary engine; and modest agriculture growth of 3.7-3.8%, although manufacturing lags at 1.25% due to power deficits.
While the Federal Government emphasizes macroeconomic indices as proof of reform success, macro stabilisation has not fully eased the cost-of-living crisis, with households facing high borrowing costs, food price volatility, and over 139 million people in poverty according to World Bank estimates.
Panellists at the Proshare conference stress the need to bridge the “transmission gap,” where gains first hit macro indicators, then businesses, before reaching households. Chinwe Egwim of the World Economic Forum urges states to boost grassroots productivity through processing plants, roads, and market infrastructure tailored to local realities, focusing on women and youth who dominate informal sectors.
The key challenge for 2026 will be the budget implementation. The 2025 budget underperformed due to oil production and sales shortfalls, weak revenue, and debt crowding out capital spending. The 2026 budget prioritizes infrastructure and food security, but fears persist about potential binge spending that could fuel inflation without delivering tangible results.
Economists emphasize the need to sustain or accelerate the current recovery by deepening capital markets, requiring regulatory clarity, robust pipelines, and government signals. Experts advocate partial or full privatisation of government-owned entities and assets such as the NNPC, railways, and ports to mitigate the risks posed by rising debt.
Nigeria’s agriculture policies must be modern and forward-looking, incorporating technology and research with improved extension services and fertiliser availability. Marketing boards are needed to ensure product offtake at fair prices. Stable and affordable power and transportation/logistics are essential for double-digit growth and lifting millions out of poverty.
Ultimately, inclusive growth is what citizens desire, not just numbers and indices.
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