By Jennete Ugo Anya
Nigeria could grow by as much as 5.5 percent in 2026, with inflation moderating to about 16 percent and foreign reserves climbing to $52 billion, according to projections released by the Nigerian Economic Summit Group at the launch of its 2026 Macroeconomic Outlook.
The forecast, presented recently in Lagos by NESG’s Chief Economist and Director of Research, Olusegun Omisakin, paints a cautiously optimistic picture of an economy emerging from stabilisation but still vulnerable to reform fatigue, policy reversals, and unresolved structural bottlenecks.
Nigeria’s gross domestic product (GDP) expanded by about 3.8 percent in the first nine months of 2025. The jump to a 5.5 percent growth trajectory next year, Omisakin said, would depend on consolidating recent reforms and re-energising agriculture and manufacturing, sectors critical for jobs and inclusive growth.
“By emphasising agriculture and manufacturing, we think 5.5 percent is achievable, driven by the urgency of consolidation,” he said.
The Consolidation Window
NESG framed its outlook around what it described as the “Consolidation Phase” of Nigeria’s reform journey, the narrow window between the stabilisation measures of 2024–2025 and a potential acceleration phase projected for the end of the decade.
Omisakin warned that this phase is historically the most fragile. Drawing lessons from countries such as Ghana and Brazil, he said early reform gains are often lost when governments relax implementation or lose political focus.
He described the next 18 months as critical, cautioning that without consistent policy execution and institutional deepening, Nigeria risks stalling below its consolidation targets by 2027.
Stability Is Not Growth
That caution was echoed by the NESG Chairman, Olaniyi Yusuf, who noted that while macroeconomic stabilisation is beginning to show results, it has not yet translated into broad-based prosperity.
“Stability is a necessary condition for growth, but it is not sufficient,” Yusuf said. Growth, he noted, remains uneven, driven by a narrow set of sectors with weak transmission to employment, household incomes, and welfare outcomes.
Services, which account for nearly 60 percent of GDP and are led by finance, ICT, and transport, continue to power headline growth. By contrast, agriculture expanded by only about 2 percent and manufacturing by roughly 1.5 percent, figures Omisakin described as worrying given their central role in job creation.
“With proper support, particularly at the ports and logistics level, agriculture could grow between six and eight percent,” he said.
Government Projections More Cautious
Presenting the government’s outlook, the Honourable Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, projected GDP growth of 4.68 percent in 2026, average inflation of 16.5 percent, and an exchange rate of about N1,400 to the dollar.
Edun said the projections underpin the 2026 Budget of Consolidation, Renewed Resilience and Shared Prosperity, which aims to turn macroeconomic gains into tangible improvements in electricity supply, food availability, and living standards.
“It is not about the metrics,” he said, “it is about the lived experience of Nigerians.”
The minister noted that the fiscal deficit is projected at about four percent of GDP in 2026, reflecting Nigeria’s development needs and growth ambitions. Reducing reliance on debt, he said, would depend on stronger revenue mobilisation through digitalised tax collection, a central billing system, and enforcement of new tax laws designed to broaden the base while exempting essential goods and small businesses.
Inflation Eases, Then Ticks Up
The outlook was released against a backdrop of mixed inflation signals. Data from the National Bureau of Statistics (NBS) showed headline inflation edging up to 15.15 percent in December 2025, ending eight consecutive months of decline.
While the increase from November was modest, the year-on-year figure was nearly 20 percentage points lower than the 34.8 percent recorded in December 2024. Food inflation continued to ease sharply, declining on both month-on-month and year-on-year measures, offering some relief to households.
Yet the moderation in food prices has raised concerns among farmers still grappling with high input costs, while manufacturers complain that rising energy and logistics expenses continue to push up production costs. Trade activity remains subdued, reflecting weakened purchasing power.
Nigeria also spent an estimated N5.27 trillion on food and beverage imports in the first nine months of 2025, underscoring persistent structural weaknesses in domestic supply.
Questions Over Inflation Rebasing
The credibility of the inflation data itself came under scrutiny at the summit and related economic forums. The Group Chief Economist of the African Export-Import Bank (Afreximbank), Yemi Kale, warned that Nigeria’s recent CPI rebasing may be masking the true scale of the cost-of-living crisis.
Speaking at the Lagos Chamber of Commerce and Industry economic outlook event, Kale suggested that the transition from the 2009 to the 2024 CPI base year may have been rushed. He questioned how year-on-year inflation could be calculated when old and new series were deemed non-comparable, arguing that standard statistical practice requires overlapping data to ensure continuity.
The NBS has acknowledged that without methodological adjustments, inflation would have appeared to spike sharply following rebasing, a distortion it sought to avoid by using a 12-month average for 2024 as the reference period.
Kale urged greater openness and engagement with independent experts to strengthen the framework rather than adopting a defensive posture.
Fiscal Strains and Reform Imperatives
On fiscal performance, Edun disclosed that the 2025 budget faced revenue shortfalls, with both revenue and expenditure reaching only about 60 percent of annual targets by the third quarter. While non-oil revenues improved, oil and gas receipts underperformed relative to budget assumptions.
Public debt rose to about N152 trillion, just over $100 billion, though the minister stressed that much of the increase reflected the formal recognition of legacy borrowing and exchange rate effects rather than new debt accumulation.
Despite these pressures, Edun said states benefited from full disbursement of federation account revenues, with many recording budget surpluses of around three percent, enabling higher spending on health, education, and public services.
Private Sector as the Growth Engine
Both the NESG and the government stressed that consolidation will hinge on private sector leadership. With constrained public resources and declining concessional financing, investment must increasingly come from domestic and diaspora capital.
Edun cited the rollout of a 90,000-kilometre fibre-optic network, supported by the World Bank, as an example of infrastructure investment aimed at empowering young Nigerians and driving technology-led growth.
Omisakin added that the private sector must not only partner with government but also hold it accountable for reform delivery, a core mission of the NESG.
A Narrow Path Forward
NESG outlined four pillars for successful consolidation through 2029: credible macroeconomic anchoring, including single-digit inflation and reserves above $50 billion; structural transformation driven by agriculture and manufacturing; institutional deepening through better monetary-fiscal coordination and tax reform implementation; and evolved social protection that helps citizens transition into productive activity.
Nigeria’s macroeconomic story entering 2026 is one of cautious hope. The numbers suggest stabilisation is taking hold, but the path to sustained, inclusive growth remains narrow. As NESG warned, the difference between consolidation and reversal will be decided not by projections, but by policy consistency and execution in the months ahead.
