Nigeria’s economy is projected to expand by 4.49 percent in 2026, reflecting sustained gains from ongoing reforms, stronger private sector investment, and improved macroeconomic stability, according to the Central Bank of Nigeria (CBN).
The apex bank disclosed this in its 2026 Macroeconomic Outlook for Nigeria published on its website on Tuesday, noting that the projected growth compares with an estimated 3.89 percent expansion in 2025.
“Importantly, the outlook is contingent on the implementation of well-sequenced, consistent fiscal and monetary policies. The fiscal policy stance is hinged on the full implementation of the 2025–2027 Medium Term Expenditure Framework (MTEF), which is expected to stimulate domestic consumption and investments, and drive aggregate demand and employment in the medium term,” the CBN said.
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According to the bank, growth prospects for 2026 remain positive, supported by continued gains from broad-based structural reforms by the government. These reforms, it said, have helped to improve the business environment, boost capital inflows, raise government revenue, and enhance stability in the foreign exchange market.
The CBN noted that its easing monetary policy stance is expected to further support economic expansion, as anticipated reductions in lending rates lower borrowing costs and improve access to credit for businesses and households. Increased private sector investment, particularly from large-scale projects such as the Dangote Refinery, is also expected to significantly brighten the growth outlook in 2026.
In addition, higher crude oil production, underpinned by improved security around oil assets, is expected to support output growth. The bank highlighted the role of enhanced surveillance and monitoring, especially following the launch of the Production Monitoring Command Centre (PMCC), as well as the expansion of domestic crude oil refining capacity and relatively stable energy prices.
The outlook also reflects expectations of increased fiscal spending, including pre-election expenditure, which could further stimulate aggregate demand. The CBN said effective coordination between monetary and fiscal policies, aimed at sustaining exchange rate stability, job creation and inflation control, would provide additional impetus to overall output growth.
However, the bank cautioned that several downside risks could weigh on the economic outlook in 2026. It noted that if the projected deceleration in inflation is not achieved, monetary policy easing could be reversed, thereby dampening growth prospects.
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While ongoing reforms are expected to raise productivity, stimulate private sector activity, and support a more diversified and competitive economy, the CBN warned that the pace of improvement could be constrained by persistently high costs of doing business, poor infrastructure, and insecurity, all of which could undermine business operations.
The bank also highlighted the risk that cost-cutting measures by firms could increase unemployment, further shrink the formal sector, and ultimately constrain economic growth. In addition, unfavourable climatic conditions could result in crop losses, disruptions to businesses and transportation services, and weaker overall economic activity.
Negative shocks to crude oil production remain another key risk. The CBN said unanticipated security breaches around oil installations or force majeure events could reduce oil output below projections, thereby constraining growth.
The baseline projections are anchored on several key assumptions, including an average crude oil price of $60 per barrel in the fourth quarter of 2025 and $55 per barrel in 2026. This is consistent with the US Energy Information Administration’s outlook that rising global crude oil inventories and supply glut would moderate oil prices.
The outlook also assumes an average Nigerian Foreign Exchange Market (NFEM) exchange rate of N1,451.63 per $1 in the fourth quarter of 2025 and N1,400 per $1 in 2026, supported by improved FX market efficiency, higher capital inflows, a current account surplus and broad-based economic recovery.
Domestic crude oil production is assumed at about 1.50 million barrels per day, excluding condensates, throughout the forecast period. Petrol pump prices are expected to hover around N950 per litre in 2026. Government expenditure is projected to align with the 2025–2027 MTEF and Fiscal Strategy Paper, reflecting an expansionary fiscal stance aimed at supporting the $1 trillion economy initiative. The Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR) are assumed at 27.00 percent and 45.00 percent, respectively.
The CBN said the baseline projections are supported by assumptions of improving business confidence and stronger investor sentiment, alongside higher crude oil production, increased investments, enhanced security around oil and gas infrastructure, and rising activity in the midstream segment of the oil industry, particularly domestic refining.
Sectoral performance is also expected to support growth. The mining and quarrying subsector is projected to continue benefiting from reforms aimed at improving efficiency and the business environment. The services sector is expected to remain a key driver of growth, with transport, particularly road and rail, and wholesale and retail trade sustaining momentum.
The information and communication technology subsector is also projected to benefit from increased investments in 5G coverage, improved internet connectivity and accelerated nationwide digital transformation. Similarly, the real estate subsector is expected to support higher economic activity in 2026, driven by sustained government support, growing mortgage financing, and continued demand for housing.
On inflation, the CBN projected a continued downward trend in 2026, supported by stability in the foreign exchange and energy markets, the lagged effects of previous interest rate hikes, and improved policy coordination.
Headline inflation is projected to decelerate to 12.94 percent in 2026 from an estimated 21.26 percent in 2025. The anticipated moderation, according to the bank, would be driven mainly by declining food prices and lower petrol prices, with increased competition in the midstream segment of the oil industry expected to ease PMS costs.
