Nigeria’s GDP could hit 5.5% growth in 2026 under full policy consolidation

Nigeria’s economy could grow by 5.5 per cent in 2026 if the government fully implements key fiscal, monetary and structural reforms, according to a new macroeconomic outlook published on Thursday by the Nigerian Economic Summit Group (NESG).

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In its Macroeconomic Projections for Nigeria in 2026 and Beyond, the policy group said the outlook is based on an “optimal consolidation pathway”, which assumes consistent execution of fiscal, monetary and structural reforms.

The projections were generated using the NESG Macroeconomic Model (Macromod), which the group said reflects near-realistic performance of key economic variables

Using its NESG Macromod, the group also developed a sub-optimal scenario, warning that partial execution or abandonment of reforms would weaken economic performance.

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Under the optimal scenario, NESG expects growth in 2026 to be broader than during the stabilisation period between the second quarter of 2023 and the fourth quarter of 2025, when only four of Nigeria’s 20 major economic sectors recorded growth above 5 per cent.

The report said consolidation reforms could ease long-standing structural constraints and support more inclusive sectoral expansion.

Speaking at the launch of the report, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said Nigeria was entering a consolidation phase after two years of difficult reforms.

He said macroeconomic stability had improved but warned that the gains were fragile, stressing that the country “cannot afford to pause or retreat” if stability is to translate into growth, jobs and poverty reduction.

The outlook also assumes domestic crude oil production rising to about two million barrels per day, improved capital expenditure implementation, growth in local oil refining and a reduction in fuel imports.

NESG added that a modest increase in global oil prices would support fiscal revenues, while lower global interest rates, easing geopolitical tensions and improved global economic stability could strengthen Nigeria’s external position.

Reforms in the foreign exchange market, including improved liquidity and market efficiency, were identified as critical to sustaining growth.

NESG said better FX availability would support manufacturing, which relies heavily on imported raw and intermediate inputs, while reducing currency volatility risks.

The report also highlighted the role of electricity subsidy reforms and broader energy sector stabilisation in lowering the government’s fiscal burden and improving operating conditions for businesses, particularly micro, small and medium enterprises.

Improved power supply and fuel availability, it said, would reduce business disruptions and raise productivity.

In agriculture, NESG said targeted interventions in financing, storage, warehousing and logistics could improve value-chain efficiency, cut post-harvest losses and boost productivity.

It added that the oil and gas sector would remain central to Nigeria’s economic performance in 2026, serving as a key source of GDP growth, foreign exchange inflows and government revenue.

On prices, NESG projected that inflation could decline to 16.0 per cent in 2026, from an estimated 21.0 per cent average in 2025, if fiscal and monetary policies are effectively coordinated.

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While the slowdown would signal improved macroeconomic stability, the group noted that inflation would remain elevated, requiring sustained policy discipline.

Looking beyond 2026, NESG said consistent reform implementation could place Nigeria on a path towards 8.5 per cent economic growth by 2029, a level it described as necessary to move the economy into an acceleration phase.

It cautioned, however, that weaker policy commitment could delay or derail those gains.