Nigeria’s Economy Set for Steadier Growth in 2026 Amid Reforms and Policy Support
Nigeria’s economic trajectory is poised for improvement in 2026, with the Central Bank of Nigeria (CBN) projecting stronger growth, lower inflation, and a healthier external position, driven by ongoing reforms, better oil sector performance, and more accommodating monetary policies.
In its recently released Macroeconomic Outlook for 2026, the apex bank forecast a 4.49 per cent increase in Gross Domestic Product (GDP), a moderation of headline inflation to around 12.94 per cent, and an expansion of external reserves to $51.04 billion. According to the CBN, these indicators reflect a “realistic window of opportunity” for consolidating macroeconomic stability following gains recorded in 2025 despite global and domestic challenges.
Global Context and Nigeria’s 2025 Performance
The CBN noted that global economic growth slowed slightly to an estimated 3.2 per cent in 2025, down from 3.3 per cent in 2024, due to lingering trade tensions and weaker demand in major economies. Global inflation, however, moderated to 4.2 per cent, supported by lower energy prices and the continued normalisation of supply chains, while financial conditions eased as monetary policies became less restrictive, boosting investor confidence.
Against this backdrop, Nigeria’s economy performed relatively well, recording an estimated 3.89 per cent growth in 2025, up from 3.38 per cent in 2024. The CBN attributed this performance to improvements in both the oil and non-oil sectors, highlighting the impact of domestic reforms and a gradual recovery in productive activities.
Headline inflation, although still elevated, showed signs of moderation, averaging 21.26 per cent for 2025 compared with 24.48 per cent in January. This was largely influenced by a tight monetary stance, relative exchange rate stability, and improved coordination between monetary and fiscal authorities.
Monetary and Financial Sector Developments
Monetary expansion slowed during 2025 as key interest rates rose, reflecting tighter money market conditions. In September, the CBN eased its policy stance to support domestic growth and investment, signaling a move toward balancing price stability with output expansion.
The banking system remained broadly stable, with financial soundness indicators aligning with regulatory benchmarks. The CBN credited this to sustained oversight, macroprudential guidelines, and ongoing efforts to strengthen the resilience of financial institutions.
Fiscal conditions also improved, aided by policy and institutional reforms alongside stable oil prices. Public debt stood at 33.98 per cent of GDP as of June 2025, with domestic debt representing 52.86 per cent and external debt 47.14 per cent, remaining within acceptable limits.
External Sector Gains
Nigeria’s external sector strengthened in 2025, recording a balance of payments surplus of $5.8 billion. External reserves increased to $45.01 billion, supported by higher capital inflows, improved export receipts, and expanding domestic refining capacity. Relative stability in the foreign exchange market was underpinned by market-oriented FX reforms and rising inflows from portfolio investors and exporters.
2026 Outlook: Growth, Inflation, and Investment
Looking ahead, the CBN expects Nigeria’s economy to grow by 4.49 per cent in 2026. The projected growth is expected to be supported by continued structural reforms, a gradually easing monetary policy, improved oil sector output, and rising investor confidence.
Headline inflation is projected to moderate sharply to around 12.94 per cent, reflecting falling food prices and lower fuel costs, alongside expectations of sustained policy support and improved supply conditions. Monetary aggregates are likely to be influenced by exchange rate movements, fiscal operations, election-related spending, and ongoing prudential measures, while the capital market is expected to remain positive amid bank recapitalisation and stronger investor confidence.
Fiscal and Debt Outlook
The fiscal outlook for 2026 is optimistic, supported by non-oil revenue mobilisation and continued implementation of the Nigeria Tax Act, 2025. The Federal Government’s projected retained revenue and expenditure stand at ₦35.51 trillion and ₦47.64 trillion respectively, resulting in a provisional fiscal deficit of ₦12.14 trillion, equivalent to roughly 3.01 per cent of GDP. Public debt is projected to rise modestly to 34.68 per cent of GDP by end-2026, reflecting anticipated borrowings to finance the deficit.
External Position Strengthening
The external sector is expected to remain robust, with the current account surplus projected at $18.81 billion, driven by higher oil and gas output, improved domestic refining capacity, steady remittance inflows, and strong export performance. External reserves are expected to increase to $51.04 billion, further enhancing Nigeria’s external buffers and exchange rate stability.
Risks and Policy Measures
The CBN cautioned that several risks could challenge the outlook, including potential inflationary pressures, fiscal slippages, adverse climatic conditions, security challenges, and geopolitical tensions. Any reversal in disinflation or global financial shocks could necessitate renewed monetary tightening and affect growth prospects.
To mitigate these risks, the CBN plans to continue balancing price stability with output growth, strengthen foreign investment inflows, enhance financial stability, and deepen fiscal reforms, including broader tax mobilisation and prudent borrowing strategies.
Conclusion
The CBN believes that the 2026 macroeconomic outlook offers an opportunity to consolidate gains, sustain stability, and foster inclusive, private-sector-led growth, provided key domestic and external risks are carefully managed.