Nigerian economy expected to grow 4.49% in 2026, inflation to ease

Nigeria’s economy is expected to grow faster in 2026 with inflation slowing sharply as reforms, improved investor confidence and gradual easing of monetary policy support macroeconomic stability.

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The Central Bank of Nigeria (CBN) disclosed this in its Macroeconomic Outlook for Nigeria, 2026 published on Tuesday.

The outlook also comes as the global economy slowed in 2025. Growth in major economies eased to 3.20 per cent from 3.30 per cent in 2024, weighed down by trade tensions and weaker demand.

Global inflation, however, moderated to 4.20 per cent, supported by lower energy costs and improving supply chains.

“The Nigerian economy is expected to continue expanding, with growth projected at 4.49 per cent in 2026,” the report said.

The bank said the projection hinges on “continued gains from broad-based structural reforms and a gradually easing monetary policy stance,” the CBN said looking ahead.

The bank said these measures are expected to improve the business environment, boost investor confidence and support private-sector-led growth.

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Higher oil production, supported by improved security in production areas, and investments in local refining are also expected to lift output.

Nigeria’s economy grew an estimated 3.89 per cent in 2025, up from 3.38 per cent in 2024, supported by both oil and non-oil sectors. Inflation eased during the year, following tight monetary policy, relative stability in the exchange rate and improved coordination between fiscal and monetary authorities.

Nigeria’s headline inflation has eased significantly this year, dropping for the eighth consecutive month to 14.45 per cent in November, down from 16.05 per cent in October, according to the National Bureau of Statistics. The figure is the lowest annual inflation rate in recent years and reflects slowing food price growth, a trend that is easing cost‑of‑living pressures for many households.

Inflation is expected to moderate further in 2026, easing pressure on households.

“Headline inflation is projected to moderate to an estimated average of 12.94 per cent in 2026, driven by declining food and premium motor spirit (PMS) prices,” the CBN said.

This would mark a significant improvement from the 21.26 per cent average recorded in 2025.

On the external front, the bank said stronger exports, steady inflows of remittances, rising oil and gas output, and gains from domestic refining would underpin a stronger current account.

External reserves are projected to rise to $51.04 billion, from an estimated $45.01 billion in 2025, while reforms in the foreign exchange market are expected to keep the naira relatively stable.

Fiscal prospects for 2026 were also positive, with non-oil revenue expected to improve under the Nigeria Tax Act, 2025.

The federal government’s retained revenue and expenditure are projected at N35.51 trillion and N47.64 trillion, respectively, resulting in a provisional deficit of N12.14 trillion (3.01 per cent of GDP). Public debt is projected to increase slightly to 34.68 per cent of GDP by the end of 2026.

The CBN warned that the outlook could be affected by risks, including higher fiscal spending, renewed global financial volatility, adverse weather, and disruptions in crude oil production.

“The outlook for the domestic economy could be susceptible to several risks. Unanticipated headwinds may upturn the expected deceleration in inflation. Inflation projections could be derailed if fiscal expenditure rises disproportionately above the benchmark or if a sudden deterioration in global financial market condition triggers capital reversals that could rekindle exchange rate volatility.

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Growth prospects could be adversely affected if an unlikely reversal of the expected disinflation necessitates monetary tightening,” it stated.

Rising non-performing loans and concentration risks in the banking sector could also weigh on growth.

The apex bank said it would continue to balance price stability with support for growth, while deploying policies to attract foreign investment, strengthen financial stability and consolidate gains in the foreign exchange market.