Nigeria’s economic outlook for 2026 reflects a gradual strengthening of macroeconomic conditions following a period of intense adjustment. According to projections released by the Central Bank of Nigeria (CBN), the economy is expected to grow by 4.49 per cent in 2026, while inflation is projected to ease to 12.94 per cent. These forecasts signal a measured recovery driven by monetary tightening, exchange-rate reforms and improving external balances, even as fiscal pressures and structural constraints remain significant.
At a time when global growth is expected to remain moderate, with the International Monetary Fund projecting world output growth of just over 3 per cent in 2026, Nigeria’s outlook positions it among the faster-growing economies in sub-Saharan Africa. The projections suggest a gradual shift from stabilisation to consolidation, anchored on policy discipline and institutional reforms.
READ ALSO: South Africa’s Central Bank Leads Radical Cash Modernization Initiative
The CBN estimates that Nigeria’s real gross domestic product will expand by 4.49 per cent in 2026, up from an estimated 3.89 per cent in 2025 and 3.38 per cent in 2024. This improvement reflects expectations of stronger performance across oil and non-oil sectors, supported by policy consistency and improved investor confidence.
Oil production is assumed to average about 1.5 million barrels per day, with a benchmark oil price of around 55 dollars per barrel. While conservative, these assumptions are designed to reduce fiscal risk and limit exposure to global oil price volatility. Oil revenues remain central to government finances and foreign exchange inflows, making output stability a key variable in the overall growth outlook.
Beyond hydrocarbons, the non-oil economy is expected to continue driving expansion, supported by services, trade, agriculture and manufacturing. Structural reforms aimed at improving the business environment, strengthening revenue mobilisation and reducing distortions in the foreign exchange market are expected to support private sector activity over the medium term.
Inflation remains one of Nigeria’s most pressing macroeconomic challenges, but recent data point to a gradual easing trend. According to Reuters, headline inflation declined to 14.45 per cent in November 2025, marking several consecutive months of moderation after prolonged price pressures.
Looking ahead, the CBN projects that inflation will average 12.94 per cent in 2026, reflecting the combined effects of tight monetary policy, relative exchange-rate stability and easing supply-side pressures. Food inflation, which has historically driven headline inflation in Nigeria, is expected to moderate as logistics constraints ease and domestic production improves.
Although inflation at this level remains elevated by global standards, the downward trajectory represents a significant improvement from earlier peaks and signals progress towards macroeconomic normalisation. The CBN has indicated that maintaining price stability remains its overriding mandate, particularly given the impact of inflation on household welfare and investor confidence.
Monetary Policy Direction and Institutional Recalibration
Monetary policy has played a central role in Nigeria’s stabilisation strategy. The CBN maintained a tight stance through 2025, keeping the monetary policy rate at 27 per cent, while using complementary tools to manage liquidity and anchor inflation expectations. Adjustments to deposit and lending facilities were designed to reinforce monetary transmission without destabilising the financial system.
A notable development in the outlook period is the CBN’s move toward a clearer inflation-targeting framework. The bank has signalled its intention to improve transparency, strengthen policy communication and align its operations more closely with global central banking standards. This shift is intended to enhance credibility, guide market expectations and support long-term price stability.
Such institutional recalibration is particularly significant for Nigeria, where past episodes of policy inconsistency undermined investor confidence. The renewed emphasis on rule-based monetary management is therefore a key pillar of the 2026 outlook.
External Buffers and Foreign Exchange Conditions
Nigeria’s external position is projected to strengthen further in 2026. The CBN forecasts that foreign exchange reserves will rise to approximately 51.04 billion dollars, supported by improved export receipts, remittance inflows and tighter management of external balances. In parallel, the current account balance is expected to record a surplus of about 18.81 billion dollars.
These developments are critical for exchange-rate stability. Stronger reserves provide a buffer against external shocks and enhance the central bank’s capacity to manage volatility in the foreign exchange market. They also help rebuild confidence among foreign investors and trading partners, particularly following recent reforms to unify and liberalise the exchange-rate system.
Improved external buffers are expected to support a more predictable operating environment for businesses reliant on imports, while also reducing pressure on public finances linked to foreign currency obligations.
Fiscal Pressures and Debt Dynamics
Despite improvements on the monetary and external fronts, fiscal pressures remain a central concern. The CBN projects Nigeria’s fiscal deficit at ₦12.14 trillion in 2026, equivalent to approximately 3.01 per cent of GDP. Financing is expected to rely largely on domestic borrowing, reflecting cautious external debt management.
Nigeria’s public debt-to-GDP ratio remains below the sub-Saharan African average, but debt servicing costs continue to absorb a large share of government revenue. This imbalance underscores the importance of ongoing fiscal reforms aimed at broadening the tax base, improving revenue collection efficiency and rationalising expenditure.
The success of Nigeria’s medium-term outlook will therefore depend not only on growth and inflation outcomes but also on the government’s ability to strengthen fiscal sustainability without undermining social and capital spending priorities.
Across sub-Saharan Africa, economic growth in 2026 is projected at approximately 4.4 per cent, supported by easing inflation, stronger domestic demand and gradual recovery in global trade. Nigeria’s projected growth rate places it among the region’s stronger performers, reinforcing its role as a key anchor economy.
Globally, however, conditions remain challenging. Persistent geopolitical tensions, high global interest rates and fragile recovery in major economies continue to shape capital flows and investment decisions. Within this environment, Nigeria’s emphasis on macroeconomic stability, policy coordination and institutional reform is intended to shield the economy from external volatility while positioning it for medium-term resilience.
A Measured Outlook Anchored in Policy Discipline
Nigeria’s 2026 economic outlook reflects cautious optimism grounded in measurable policy outcomes rather than headline ambition. Growth approaching 4.5 per cent, easing inflation, rising external reserves, and clearer monetary direction suggest that stabilisation efforts are beginning to yield results.
Nonetheless, risks remain. Fiscal pressures, structural bottlenecks and social vulnerabilities require sustained attention. The effectiveness of reforms will depend on consistency, transparency and the ability to translate macroeconomic improvements into tangible gains for households and businesses.
Taken together, the projections for 2026 indicate an economy moving towards greater stability, with the Central Bank of Nigeria playing a central role in shaping a more predictable and disciplined macroeconomic environment. If current reforms are maintained, Nigeria is positioned to strengthen confidence, support investment and consolidate its role as a leading economic force on the African continent.
