Analysts Forecast 5.5% GDP Growth, Inflation At 6% In 2026

Nigeria’s headline inflation is projected to ease into single-digit territory by the end of 2026, while economic growth is expected to strengthen to about 5.5 per cent for the full year, according to the latest macroeconomic outlook released by Proshare Nigeria and Economic Associates.

In their Country Watch Nigeria 2026 Edition, the joint analysts said headline inflation is forecast to decline to 6.57 per cent by December 2026, marking a sharp moderation from the 34.6 per cent peak recorded in November 2024 and 15.15 per cent in December 2025.

The report also projected full-year 2026 real GDP growth of 5.55 per cent, with acceleration to 6.4 per cent by the second quarter of the year, signalling what it described as a transition from stabilisation to measurable expansion.

The report noted that Nigeria enters 2026 at a critical macroeconomic inflection point, as analysts said the economy has moved from a prolonged phase of structural distortions into a recovery phase supported by reforms and improved macro fundamentals.

They added that “headline inflation is forecast to reach 6.57 per cent by December 2026, entering single-digit territory,” underpinned largely by foreign exchange stabilisation and sustained reserve accumulation.

The report attributed the earlier spike in prices primarily to exchange rate pressures, stating that its regression analysis identified the foreign exchange pass-through mechanism as the principal inflation driver during the surge. With the naira stabilising and foreign reserves strengthening, price pressures are now expected to moderate more decisively.

On growth, the analysts said real GDP expanded to 4.23 per cent in the second quarter of 2025, up from 3.19 per cent in the corresponding period of 2024 and 2.51 per cent in 2023.

Building on that momentum, they project “full year 2026 GDP growth of 5.55 per cent, with acceleration to 6.4 per cent by Q2 2026.”

They noted that the recovery phase, which began in December 2024, delivered verifiable stabilisation across key macro 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 per cent.

The Central Bank of Nigeria had revealed that the country’s gross external reserves had climbed to a 13-year high of over $50 billion by mid-February 2026, compared with $33 billion in 2023. Net foreign reserves also improved significantly, rising from nearly $4 billion in 2023 to roughly $32 billion at the start of 2026.

The analysts stated that “gross foreign reserves have crossed a 13-year high,” describing the trajectory as supportive of exchange rate stability and improved investor confidence. They further projected that the exchange rate under the Nigerian Foreign Exchange Market framework would stabilise around N1,318 to the dollar in 2026, supported by continued net reserve accumulation.

On output dynamics, nominal GDP in naira terms rose to N442 trillion in 2025 from N314 trillion in 2023, while dollar GDP increased to 308 billion dollars in 2025, marking the first expansion since 2020 after years of contraction.

The report emphasised that positive growth acceleration has become broad-based, with 35 of 46 sectors recording improvement in the second quarter of 2025 and all four aggregate sectors, agriculture, industry, manufacturing and services, posting gains. Industry recorded the fastest acceleration.

Despite the upbeat outlook, the analysts cautioned that risks remain. They identified exposure to external commodity and capital flow shocks, reform sustainability concerns, insecurity in productive regions and pre-election fiscal pressures as key downside factors.

“Nigeria remains exposed to geopolitical disruptions and shifts in global commodity prices, particularly crude oil,” the report warned, adding that capital flow reversals triggered by policy changes in advanced economies could pressure reserves and exchange stability.

It also stressed that “the recovery remains contingent on continued implementation of market-oriented reforms,” noting that policy reversals or inconsistent signalling could undermine the baseline projections.

“The 2026 forecast outlook is conditioned on sustained reform implementation, continued reserve adequacy, and contained pre-election fiscal pressures,” they stated, adding that under these conditions, Nigeria’s macro transition represents one of the most consequential structural shifts in recent economic history.