*Projects 12.4% inflation rate, 34.6% debt to GDP
*Lists risks to economic growth
By Babajide Komolafe, Economy Editor
The Central Bank of Nigeria, CBN, has projected a stronger macroeconomic outlook for the country in 2026, forecasting a 4.49 per cent growth in Gross Domestic Product, GDP, a moderation in inflation to about 12.4 per cent, and a rise in external reserves to $51.04 billion, amid sustained reforms, improved oil sector performance and easing monetary conditions.
In its Macroeconomic Outlook for Nigeria in 2026, the apex bank said the projections point to a “realistic window of opportunity” for macroeconomic stabilisation, following the gains recorded in 2025 despite global and domestic headwinds.
Global backdrop, Nigeria’s 2025 performance
The CBN noted that global economic growth slowed marginally to an estimated 3.20 per cent in 2025 from 3.30 per cent in 2024, reflecting lingering trade tensions and weaker demand in major economies.
However, global inflation moderated to 4.20 per cent, driven largely by lower energy prices and continued normalisation of supply chains, while financial conditions eased as monetary policies became less restrictive and investor confidence improved.
Against this backdrop, Nigeria’s economy recorded a stronger showing in 2025, with growth estimated at 3.89 per cent, compared with 3.38 per cent in 2024. According to the Bank, this performance was supported by improvements in both the oil and non-oil sectors, underscoring the impact of domestic reforms and gradual recovery in productive activities.
Inflationary pressures, though still elevated, moderated in 2025 following the rebasing of the Consumer Price Index by the National Bureau of Statistics. Headline inflation, which stood at 24.48 per cent in January 2025, ended the year with an estimated average of 21.26 per cent, shaped by a tight monetary policy stance, relative exchange rate stability and improved coordination between monetary and fiscal authorities.
Monetary, financial sector developments
In the financial sector, expansion in monetary aggregates slowed in 2025 as key interest rates rose, reflecting tight conditions in the money market. However, the CBN eased its policy stance in September 2025 to support domestic growth and investment, signalling a shift towards balancing price stability with output expansion.
The banking system remained broadly stable, with key financial soundness indicators aligned with regulatory benchmarks. The Bank attributed this to its oversight functions, macroprudential guidelines and sustained efforts to strengthen the resilience of financial institutions.
On the fiscal side, Nigeria’s fiscal space improved in 2025, supported by policy and institutional reforms, stable crude oil prices and domestic production. Total public debt stood at 33.98 per cent of GDP as at end-June 2025, with domestic debt accounting for 52.86 per cent and external debt 47.14 per cent, remaining within generally acceptable thresholds.
External sector gains
The external sector recorded a positive performance in 2025, with a balance of payments surplus estimated at $5.80 billion. External reserves rose to about $45.01 billion, up from $40.19 billion in 2024, supported by higher capital inflows, improved export receipts and expanding domestic refining capacity.
The relative stability in the foreign exchange market was buoyed by domestic reforms, including market-oriented FX policies, as well as increased inflows from portfolio investors and exporters.
2026 outlook: growth, inflation, reserves
Looking ahead, the CBN projects that Nigeria’s economy will grow by 4.49 per cent in 2026, driven by continued gains from broad-based structural reforms and a gradually easing monetary policy stance.
These, the Bank said, are expected to further improve the business environment, enhance investor confidence and support private-sector-led growth.
The growth momentum is also expected to be complemented by increased production and investment in the oil sector, supported by improved security surveillance and gains from enhanced domestic refining capacity.
Headline inflation is projected to moderate sharply to an estimated average of about 12.94 per cent in 2026, driven by declining food prices and lower premium motor spirit, PMS, costs. The Bank expressed optimism that sustained reforms and improved supply conditions would help anchor inflation expectations.
Growth in monetary aggregates in 2026 is expected to be influenced largely by exchange rate movements, fiscal operations, election-related spending and continued implementation of prudential measures. Meanwhile, the capital market is projected to remain bullish, supported by the ongoing bank recapitalisation exercise, rising investor confidence and policy measures aimed at fostering growth.
Fiscal, debt outlook
The fiscal outlook for 2026 is described as optimistic, driven by sustained non-oil revenue mobilisation and continued implementation of the Nigeria Tax Act, 2025, alongside other reforms. The Federal Government’s retained revenue and expenditure are projected at ₦35.51 trillion and ₦47.64 trillion, respectively, resulting in a provisional fiscal deficit of ₦12.14 trillion, equivalent to about 3.01 per cent of GDP.
Public debt as a percentage of GDP is projected to rise modestly to 34.68 per cent by end-2026, from 33.98 per cent as at June 2025, reflecting expected new borrowings to finance the deficit. The CBN stressed the importance of keeping the debt strategy aligned with fiscal rules to ensure sustainability.
Stronger external position
The positive trend in the external sector is expected to be sustained in 2026. The current account surplus is projected to rise significantly to $18.81 billion, supported by strong exports, steady remittance inflows, increased oil and gas output, improved domestic refining capacity and rising global demand from key trading partners.
Portfolio investment inflows and external borrowings are expected to keep the financial account in a net borrowing position of $10.15 billion, while the International Investment Position is projected to record a net borrowing position of $69.58 billion, reflecting increased capital inflows attracted by relatively high yields.
Reforms in the foreign exchange market are expected to sustain exchange rate stability, while external reserves are projected to rise further to $51.04 billion in 2026, strengthening Nigeria’s external buffers.
Risks to outlook
Despite the optimistic projections, the CBN cautioned that the outlook for the domestic economy remains susceptible to several risks. Unanticipated headwinds could derail the expected deceleration in inflation, particularly if fiscal expenditure rises disproportionately above benchmarks or if a sudden deterioration in global financial conditions triggers capital reversals and renewed exchange rate volatility.
Growth prospects could also be adversely affected if a reversal of the expected disinflation trend necessitates renewed monetary tightening. In addition, unfavourable climatic conditions, disruptions to crude oil production and security challenges could dampen output growth, impair budget implementation and weaken overall macroeconomic performance.
The Bank also warned that continued geopolitical tensions and a re-escalation of protectionist trade policies could negatively affect Nigeria’s trade balance and exchange rate stability. In the financial sector, a significant rise in non-performing loans could weaken banks’ balance sheets and pose systemic risks, while concentration risks arising from the ongoing recapitalisation exercise could crowd out other issuers and trigger investor fatigue.
Policy stance
In response to these risks, the CBN reaffirmed its commitment in 2026 to balancing the objectives of price stability and supporting output growth. The Bank said it would deploy appropriate policy instruments to attract foreign investment, consolidate stability in the foreign exchange market and enhance financial stability.
It also pledged to deepen the operational integration of the Global Standing Instruction framework across financial institutions, strengthen credit discipline and enhance cybersecurity regulations.
On the fiscal side, the Bank underscored the need to broaden the tax net and establish a more efficient and equitable tax regime through effective implementation of the Nigeria Tax Act, 2025, as well as ensuring that borrowing remains consistent with fiscal sustainability rules.
Overall, the CBN said the 2026 outlook presents an opportunity to consolidate recent gains, sustain macroeconomic stability and place Nigeria on a firmer path of inclusive, private-sector-led growth, provided key risks are effectively managed.
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