The Nigerian Economic Summit Group (NESG) has projected a 5.5 per cent real Gross Domestic Product (GDP) growth for Nigeria in 2026, signalling cautious optimism about the country’s economic outlook as key reforms begin to yield results.
The projection, contained in the NESG’s latest macroeconomic outlook, represents a notable improvement over the estimated 3.8 per cent growth recorded in 2025.
However, the policy think tank warned that the forecast is conditional on the Federal Government successfully implementing what it described as the “Consolidation Phase” of its economic transformation agenda.
Speaking on the outlook, NESG Chief Executive Officer, Dr Tayo Aduloju, said Nigeria stands at a defining moment in its economic trajectory after two years of far-reaching and, at times, painful reforms.
“Nigeria enters 2026 at a crucial point in its economic journey. Two years of bold and often challenging reforms are beginning to deliver results. Inflation is easing, and the foreign exchange market is stabilising,” Aduloju said.
According to him, these improvements mark a decisive shift away from the crisis-driven environment that characterised the economy in recent years.
NESG projects 5.5 per cent GDP growth amid easing inflation and FX stability
Despite the encouraging indicators, the NESG cautioned that recent gains remain fragile and could easily be reversed if reforms are not institutionalised.
“Stabilisation alone is not enough,” Aduloju warned. “The decisions taken in 2026 will determine whether recent reforms translate into broad-based welfare improvements or are eroded by policy inconsistency, reform fatigue, and weak implementation.”
One of the most striking developments highlighted in the report is the sharp decline in inflation, which fell from 34.8 per cent in December 2024 to 14.5 per cent by November 2025.
This nearly 20-percentage-point drop represents the lowest inflation rate recorded since May 2022.
Under its optimal reform scenario, the NESG projected that inflation could average 16 per cent in 2026, before declining gradually to single-digit levels by 2029.
The group said achieving this trajectory would require sustained tight monetary policy, improved agricultural output, and continued stability in the foreign exchange market.
The report noted that the Central Bank of Nigeria (CBN) has already begun adjusting its stance, cutting the monetary policy rate by 50 basis points in 2025 to strike a balance between curbing inflation and supporting credit expansion.
As a result, business cost pressures have eased. The NESG’s Cost of Doing Business Index fell to 54.7 points by December 2025, placing it firmly in what the group described as the “deceleration zone.”
The NESG report also pointed to notable improvements in Nigeria’s foreign exchange market following the unification reforms introduced in mid-2023.
By the end of 2025, the naira had stabilised at approximately ₦1,505 to the dollar in the official market, while the gap between official and parallel market rates narrowed to less than three per cent.
In addition, Nigeria’s foreign reserves rose to a seven-year high of $45.5 billion in 2025, up from $40.9 billion in 2024. The increase was attributed to improved investor confidence, stronger inflows, and a successful, oversubscribed Eurobond issuance.
Reflecting these improvements, S&P Global upgraded Nigeria’s sovereign credit outlook from “stable” to “positive” in 2025, a move the NESG described as a strong endorsement of the reform agenda.
While overall growth has strengthened, the report revealed deep structural imbalances across key sectors of the economy.
The services sector remained the dominant driver of growth, accounting for 60.4 per cent of GDP expansion in 2025. Industry contributed 21.8 per cent, while agriculture lagged at 17.8 per cent, despite its importance for employment and food security.
The oil sector recorded robust growth of 9.4 per cent, reflecting higher production levels. However, manufacturing growth remained weak at around 1.5 per cent, constrained by high borrowing costs, erratic power supply, and persistent infrastructure deficits.
“Growth remains below the level required for meaningful job creation and poverty reduction,” the NESG warned, adding that productivity challenges in agriculture and manufacturing continue to limit inclusive growth.
Fiscal pressures and rising debt risks
The report also painted a sobering picture of Nigeria’s fiscal position.
Federal Government revenue improved to ₦13.7 trillion in the first seven months of 2025, with non-oil tax revenues performing strongly at 93.2 per cent of targets. In contrast, oil revenue significantly underperformed, achieving only 37.8 per cent of projections.
More concerning was the growing burden of debt servicing, which reached ₦9.8 trillion during the same period—16.7 per cent above budgeted levels. Capital expenditure suffered as a result, falling 73.7 per cent below projections.
Nigeria’s total public debt climbed to a record ₦152.4 trillion by mid-2025, up from ₦144.7 trillion in 2024. The NESG’s Debt Burden Index rose to 71.6 points, signalling heightened refinancing and repayment risks.
Two paths for Nigeria’s economic future
The NESG outlined two contrasting scenarios for the years ahead.
Under the “Optimal Consolidation Pathway,” Nigeria could achieve 5.5 per cent growth in 2026, rising to 8.5 per cent by 2029.
This, the group said, would be sufficient to lift nearly 100 million Nigerians out of poverty, provided reforms are rigorously implemented across macroeconomic stability, structural transformation, institutional strengthening, and social inclusion.
The alternative “Sub-Optimal Pathway” assumes weak implementation, renewed macroeconomic instability, slower growth, and persistently high inflation, with rising social tensions and declining investor confidence.
To stay on the optimal path, the NESG identified urgent priorities for 2026, including a clear inflation-targeting framework, transparent implementation of new tax laws, continued FX liberalisation, accelerated infrastructure delivery through public-private partnerships, and the launch of a National Apprenticeship and Skill-Transfer Programme to tackle youth unemployment.
“The challenge before policymakers is to convert stabilisation into shared prosperity,” Aduloju said.
