The World Bank has upgraded Nigeria’s economic growth forecast for 2026 to 4.3 per cent, reflecting improving macroeconomic conditions, stronger investor confidence and a gradual recovery in private sector investment.
The revised projection represents an improvement over the country’s estimated growth of about 3.9 per cent in 2025 and signals expectations of sustained economic expansion despite uncertainties in the global economy.
The forecast was highlighted in the World Bank’s October 2026 Africa Economic Update, released on October 6, and examined in an economic research report published by Coronation Asset Management.
According to the report, Nigeria’s economy is expected to expand further by 4.4 per cent in 2027 and maintain the same growth rate in 2028.
However, the outlook remains exposed to insecurity, oil production disruptions, tighter international financing conditions and potential fiscal pressures ahead of the 2027 general elections.
Nigeria’s Economic Recovery Gains Momentum
The World Bank’s revised projection comes amid indications of improving economic activity across several sectors.
Coronation Research identified financial services, information and communication technology, and real estate as important drivers of Nigeria’s economic growth.
The sectors are expected to benefit from improving macroeconomic stability and a gradual recovery in private investment.
Nigeria’s economy recorded growth of 4.43 per cent in the second quarter of 2026, compared with 3.89 per cent in the first quarter.
The improvement suggests that economic activity strengthened during the first half of the year.
Nevertheless, the full-year growth forecast remains dependent on the performance of major sectors during the remaining months.
Financial Services and Technology Support Expansion
The financial services sector remains important to Nigeria’s economic development through its role in mobilising savings, providing credit and supporting investment.
Similarly, the information and communication technology sector continues to create opportunities in digital payments, telecommunications, software development and technology-enabled services.
Real estate activity also contributes through construction, property development and related services.
Growth in these sectors could support employment and investment, although the extent of the benefits will depend on the wider business environment.
For the projected expansion to translate into broader economic improvements, businesses will need reliable infrastructure, access to financing and greater policy certainty.
Inflation Expected to Ease Further
The World Bank projects Nigeria’s inflation rate to moderate to 15.7 per cent in 2026, compared with 23.0 per cent in 2025.
The outlook also anticipates further disinflation, with inflation projected to decline to 12.2 per cent by 2028.
The reduction would represent an improvement in the pace of consumer price increases.
However, lower inflation does not necessarily mean that prices of goods and services will return to earlier levels.
Instead, it indicates that the general rate of price increases is expected to slow.
Households may therefore continue to face elevated living costs even if inflation declines.
External Reserves Strengthen Nigeria’s Position
The economic note placed Nigeria’s gross external reserves at approximately $54.93 billion.
It also reported net external reserves of about $46 billion, compared with $34 billion at the end of 2025.
The improvement provides additional context for the country’s external financial position.
The World Bank also expects Nigeria’s current account surplus to widen to 6.0 per cent of gross domestic product in 2026, compared with 4.8 per cent previously.
However, the surplus is projected to moderate to 3.4 per cent by 2028 as oil prices normalise and import demand strengthens.
Oil Production Remains Critical
Nigeria’s oil sector remains a major component of its external earnings and public revenue.
The report highlighted stronger crude oil production as one of the factors supporting the country’s economic outlook.
It stated that production reached approximately 1.70 million barrels per day in the second quarter of 2026, with a 74-month high recorded in June.
Improved production can support export earnings and government revenue.
However, disruptions arising from insecurity, operational challenges and other factors could undermine the expected benefits.
World Bank Identifies Major Risks
Despite the improved outlook, several challenges could slow Nigeria’s economic recovery.
These include tighter global financial conditions, insecurity, disruptions to oil production and increased fiscal spending ahead of the 2027 elections.
Higher international financing costs could discourage investment or increase borrowing expenses.
Insecurity could affect agricultural production, transportation and business operations.
Similarly, renewed disruptions in the petroleum industry could weaken export earnings and government finances.
Economic Growth Must Translate Into Investment
In its assessment, Coronation Research described the World Bank’s revised projection as consistent with improvements in Nigeria’s macroeconomic fundamentals.
However, it stressed that the sustainability of the recovery would depend on continued inflation moderation, foreign exchange stability and stronger private investment.
The research firm maintained that the more important challenge is converting economic stabilisation into durable, investment-led growth.
For Nigeria, achieving the projected 4.3 per cent expansion would be an encouraging development.
The broader test will be whether that growth improves employment opportunities, business productivity and household living standards.
