Nigeria’s Inflation Set to Ease, GDP Growth Projected at 5.5% in 2026

Nigeria’s headline inflation is expected to ease into single-digit territory by the end of 2026, while the country’s economy is projected to expand by about 5.5 percent, according to the latest macroeconomic outlook released by Proshare Nigeria and Economic Associates.

In their Country Watch Nigeria 2026 Edition, the analysts forecast headline inflation to decline to 6.57 percent by December 2026, a sharp moderation from 34.6 percent in November 2024 and 15.15 percent in December 2025. The report also projects full-year real GDP growth of 5.55 percent, with an acceleration to 6.4 percent by the second quarter, signalling a transition from stabilisation to measurable expansion.

The analysts noted that the recovery phase, which began in December 2024, has already delivered stabilisation across key macroeconomic indicators. The naira appreciated for the first time in five years in 2025, closing at N1,436 to the dollar, while foreign exchange premiums narrowed sharply to about two percent.

The Central Bank of Nigeria reported that gross external reserves had climbed to a 13-year high of over $50 billion by mid-February 2026, up from $33 billion in 2023. Net foreign reserves also surged from nearly $4 billion in 2023 to around $32 billion at the start of 2026. Analysts described the trajectory as supportive of exchange rate stability and improved investor confidence, projecting that the naira would stabilise around N1,318 to the dollar in 2026.

On economic output, nominal GDP in naira terms rose to N442 trillion in 2025 from N314 trillion in 2023, while GDP in dollars increased to $308 billion, marking the first expansion since 2020. The growth acceleration has become broad-based, with 35 of 46 sectors recording improvements in the second quarter of 2025. All four aggregate sectors — agriculture, industry, manufacturing, and services — posted gains, with industry recording the fastest acceleration.

Despite the positive outlook, the analysts warned that risks remain. External commodity shocks, capital flow reversals, insecurity in productive regions, and pre-election fiscal pressures could affect growth and stability.

“Nigeria remains exposed to geopolitical disruptions and shifts in global commodity prices, particularly crude oil,” the report noted. It added that the recovery hinges on sustained implementation of market-oriented reforms, continued reserve adequacy, and contained pre-election fiscal pressures. Under these conditions, the analysts described Nigeria’s macroeconomic transition as “one of the most consequential structural shifts in recent economic history.”