By Ahmed Ahmed
Nigeria’s economy is expected to grow by 4.3 percent in 2026, marking a stronger performance than in the previous year and placing the country ahead of both the global and West African averages, according to a new report by PricewaterhouseCoopers, PwC.
The projection reflects growing optimism around Nigeria’s macroeconomic direction, supported by expansion in the services sector, gradual improvement in oil and non-oil exports, easing inflationary pressures and rising investor confidence. PwC’s forecast compares favourably with its estimate of 3.1 percent global growth and 4.1 percent growth for West Africa in the same year.
PwC had earlier projected Nigeria’s economy to grow by 3.3 percent in 2025. The upward revision for 2026, the firm said, is driven largely by expectations that monetary policy conditions will gradually ease, improving refinancing conditions for businesses and supporting credit expansion.
Nigeria’s central bank cut its benchmark interest rate by 50 basis points to 27 percent in September 2025, its first-rate reduction since 2020. The move followed a sustained slowdown in inflation after it reached a 28-year high in 2024. Analysts now expect further rate cuts in 2026 as price pressures continue to moderate.
PwC believes this shift will support investment and consumption, particularly in sectors sensitive to borrowing costs. Services, which have remained resilient despite economic headwinds, are expected to remain a key growth driver, alongside steady gains in exports.
In its report titled ‘2026 Nigeria Economic Outlook: Turning Macroeconomic Stability into Sustainable Growth’, PwC outlined seven major forces expected to shape the economy in 2026. These include the effectiveness of monetary policy, global economic and geopolitical developments, fiscal sustainability and execution, uneven growth across sectors, weak consumer purchasing power, domestic security challenges, and accelerating momentum in the digital economy and artificial intelligence.
While the outlook is broadly positive, the report cautioned that subdued global and regional trade could limit Nigeria’s non-oil export growth, especially within West Africa where trade disruptions and border frictions persist. It stated that oil prices, capital flows, external financing conditions and regional trade stability will remain critical drivers of GDP growth and foreign exchange liquidity.
On the fiscal front, PwC noted that the Nigeria Tax Act 2025, which came into force this month, will play a major role in shaping the country’s revenue outlook in 2026. The law is expected to transform the revenue landscape as the government targets a tax-to-GDP ratio of 18 percent by 2027. Improved revenue mobilisation, the firm said, will be essential to sustaining growth and reducing reliance on borrowing.
Inflation remains a key risk. Although headline inflation slowed to 14.5 percent in November, PwC warned that residual price shocks could continue to erode real incomes. The firm expects inflation to decline further in 2026, supported by foreign exchange stability, consistent policy implementation and higher agricultural output.
However, it identified several upside risks, including pre-election fiscal pressures, global energy shocks and insecurity in food-producing regions. Imported inflation could also worsen if geopolitical tensions trigger capital flow reversals, placing pressure on foreign exchange reserves and weakening the naira.
Encouragingly, PwC said disinflation is likely to support demand for manufactured goods, offering relief to domestic producers who have struggled with high input costs.
On the exchange rate, the firm warned that foreign exchange pressures remain a significant risk. With a large share of government obligations denominated in foreign currency, any sharp depreciation would increase the naira cost of servicing external debt and other FX-linked commitments.
PwC projected oil prices at $55 per barrel in 2026, noting that a sustained drop below this level could weaken government revenue and FX inflows, adding pressure to the exchange rate. Still, the firm expects the naira to remain broadly stable during the year, supported by ongoing economic adjustments, improved portfolio inflows, a positive current account balance and greater policy transparency.
Debt servicing remains a major concern. With debt service costs budgeted at N15.5 trillion in 2026, nearly half of projected government revenue is expected to be absorbed by interest and principal repayments. PwC warned that this could limit fiscal space for growth-enhancing investments and social spending.
Despite these challenges, the report suggests that Nigeria has an opportunity to convert recent gains in macroeconomic stability into more durable growth. Doing so, PwC noted, will depend on disciplined fiscal management, credible policy execution and sustained efforts to build confidence among investors and households alike.
