Fitch Cuts Africa Growth to 4.2% on US-Iran Clash; Nigeria GDP to 4.4%

A drawn-out US-Iran conflict in the Middle East is altering economic outlooks for Sub-Saharan Africa, prompting Fitch Solutions to lower the region’s 2026 growth forecast to 4.2 per cent from 4.3 per cent. The firm warns of heightened inflation risks, especially in Nigeria, where prices could average 15.5 per cent—up sharply from 12.3 per cent.

Fitch’s update assumes the conflict stretches through April, disrupting oil supplies via the Strait of Hormuz and pushing Brent crude to $78 per barrel on average this year, from $70 previously.
This exposes the region’s sensitivity to energy shocks and trade disruptions.

Nigeria stands out with a nuanced forecast: GDP growth nudged up to 4.4 per cent from 4.3 per cent, thanks to soaring global oil prices that pad export revenues—crude makes up most exports and about a third of federal income.

Higher prices now deliver clearer gains, as the Dangote Refinery’s expansion cuts reliance on fuel imports, unlike the 2022 energy crisis.

Yet this boon comes with caveats. Downstream petroleum deregulation lets domestic fuel prices track global benchmarks closely, driving up transport and food costs.

Inflation at 15.5 per cent could squeeze household budgets, offsetting fiscal windfalls and curbing private spending. Fitch expects oil-driven government spending and sector investments to balance out weaker consumption, netting modest growth.

Regionally, oil importers like Kenya and South Africa face steeper hits from pricier energy and fertilizers, straining current accounts and currencies. Ghana and other West African peers fare better due to lower energy exposure.

Fitch views impacts as contained if tensions ease by late April, with oil prices normalising afterward. Still, downside risks loom: prolonged strife could spike prices further, fueling inflation, currency slides, and instability.

Investor caution may also slow portfolio inflows to emerging markets.