By Jennete Ugo Anya
Nigeria’s economic recovery is showing signs of gaining firmer ground, with the Nigerian Economic Summit Group (NESG) projecting stronger growth in the second half of 2026 and external reserves rising to about US$53 billion by the end of the year.
The outlook, contained in the NESG’s H1 2026 State of the Economy report, titled ‘Turning Potential into Progress,’ projects economic growth to accelerate to 4.5 percent in the second half, taking full-year gross domestic product (GDP) growth to approximately 4.2 percent.
It is a cautiously positive assessment. The projection suggests that recent improvements in macroeconomic stability could begin to translate more visibly into economic activity, although the country still faces structural constraints that could slow the pace of expansion.
The NESG expects growth to be supported by stronger performance across the oil, manufacturing, agriculture and services sectors.
The oil sector is expected to remain an important contributor. Higher domestic crude production, improved security conditions and the gradual implementation of upstream reforms are projected to sustain the sector’s recovery.
Another development could prove particularly important for the broader economy: increased domestic refining.
Greater refining activity could raise industrial output while reducing Nigeria’s dependence on imported refined petroleum products. Beyond saving foreign exchange, higher domestic refining capacity could strengthen the link between the oil sector and domestic manufacturing, transportation and other productive activities.
Manufacturing is also expected to maintain its growth momentum.
The NESG projects that lower inflation, greater exchange-rate stability and improved foreign-exchange liquidity will gradually ease some of the pressures confronting manufacturers. Better access to foreign exchange could allow businesses to plan imports of machinery and raw materials with greater certainty, while a more stable naira could improve business confidence.
But the recovery is not without obstacles.
Unreliable electricity supply, high borrowing costs, expensive logistics and weak domestic demand remain major constraints. These factors continue to raise production costs and limit the ability of businesses to expand at the pace required to generate broader employment and investment.
Agriculture presents another mixed picture.
The NESG expects improved rainfall and favourable harvest conditions to support crop production and ease some food supply pressures. However, insecurity in major food-producing regions remains a serious risk. Flooding and other climate-related disruptions could equally reverse some of the expected gains.
The services sector is projected to remain the principal engine of growth.
Financial services are expected to benefit from bank recapitalisation, stronger credit intermediation and improved investor confidence. The information and communications technology sector should also continue to expand as digital adoption, data consumption and telecommunications infrastructure investment increase.
The external sector provides another reason for cautious optimism.
The NESG projects that Nigeria’s external reserves could rise to about US$53 billion by year-end, supported by higher crude oil production, favourable oil prices, stronger non-oil exports and sustained current-account surpluses.
The reserve position is already approaching that level.
Central Bank of Nigeria Governor, Olayemi Cardoso, recently reported that gross external reserves had risen to US$52.52 billion as of July 17, from US$50.47 billion at the end of May. He attributed the increase mainly to receipts from crude oil-related taxes and third-party inflows.
The improvement in reserves could provide an additional buffer for the foreign-exchange market.
According to the NESG, stronger investor confidence, increased foreign portfolio inflows and higher diaspora remittances through formal channels should further support foreign-exchange liquidity. Continued reforms in the foreign-exchange market could also help narrow the gap between official and parallel-market rates.
For businesses and investors, greater exchange-rate stability matters because it improves predictability. It can reduce speculative demand for foreign currency and make it easier for companies to plan investment, pricing and production.
The NESG also expects continued monetary policy discipline to reinforce these gains.
Yet inflation remains the major pressure point.
The think-tank projects inflation to average 15.5 percent in the second half of 2026 and across the full year. Persistent insecurity in farming communities, flooding, high transportation costs, seasonal demand and relatively high energy costs are expected to keep prices elevated.
Some of these pressures could, however, be moderated by exchange-rate stability, the delayed impact of tighter monetary policy and favourable base effects.
The emerging picture is therefore neither one of an economy that has fully turned the corner nor one trapped in stagnation. It is an economy gradually building stronger foundations for expansion while confronting bottlenecks that have constrained productivity for years.
The projected 4.2 percent full-year growth, alongside reserves approaching US$53 billion, would represent meaningful progress if sustained. But the quality of that growth will matter as much as the headline numbers.
