Nigeria’s economy is expected to gain stronger momentum in the second half of 2026, with growth expected to rise to 4.5 percent and full-year Gross Domestic Product (GDP) expansion to reach about 4.2 percent, the Nigerian Economic Summit Group (NESG) said.
In its report on the state of the economy for the first half of 2026 published this week and titled “Turning potential into progress,” the think tank said the outlook is based on better performance in the oil, manufacturing, agricultural and services sectors, even as structural challenges continue to limit the pace of expansion.
The oil sector is expected to maintain growth, supported by higher domestic crude oil production amid improved security conditions and the gradual implementation of upstream reforms. Greater domestic refining activity should also boost industrial production, reduce dependence on imported refined petroleum products and strengthen the country’s external position.
The manufacturing sector is expected to maintain its growth momentum as lower inflation, continued exchange rate stability and greater foreign exchange liquidity ease production constraints and boost business confidence. However, the NESG warned that unreliable electricity supply, high borrowing costs, high logistics expenses and weak domestic demand will remain major constraints.
In agriculture, improved rainfall and favorable crop conditions are expected to support crop production and alleviate pressures on food supply. However, persistent insecurity in key food-producing regions and climate-related crises, particularly flooding, could undermine these gains.
The services sector is expected to remain the main driver of growth. Financial services will benefit from recent bank recapitalization, increased credit intermediation and increased investor confidence, while information and communications technology is expected to see strong expansion driven by growing digital adoption, increased data consumption and continued investment in telecoms infrastructure.
On the external front, the NESG said the sector should remain resilient in the second half of the year, with the naira broadly stable and external reserves projected to rise to around $53 billion by the end of the year. Higher crude oil production, favorable oil prices, higher non-oil exports and sustained current account surpluses are expected to boost foreign exchange earnings and support reserve accumulation.
Greater investor confidence, higher foreign portfolio inflows, increased diaspora remittances through formal channels and continued foreign exchange market reforms are also expected to improve liquidity and reinforce exchange rate stability. Continued monetary policy discipline, coupled with a tighter premium in parallel markets, should reduce speculative demand and foster a more transparent and resilient foreign exchange market.
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These developments come as the Governor of the Central Bank of Nigeria, Yemi Cardoso, reported that gross external reserves had already increased to $52.52 billion as of July 17, up from $50.47 billion at the end of May. It attributed the increase mainly to crude oil-related tax revenues and third-party inflows.
However, inflation is expected to remain elevated, averaging 15.5 percent in the second half of 2026 and throughout the year. The NESG linked the projection to persistent insecurity in major farming communities, weather-related disruptions such as flooding, high transportation costs, election-related expenses, seasonal holiday demand and relatively high energy costs. These pressures could be partially offset by exchange rate stability, the lagged effects of a restrictive monetary policy, and favorable base effects.
Overall, the NESG assessment points to a cautiously optimistic outlook in which macroeconomic stability is strengthened even as structural headwinds continue to moderate the speed of the recovery.
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