Despite security and infrastructure challenges, Nigeria's economic prospects for 2026 have brightened considerably, with multiple international institutions upgrading their growth forecasts for Africa's largest economy.
Upgraded Growth Projections
The International Monetary Fund (IMF) revised Nigeria's 2026 economic growth forecast upward to 4.4 percent on January 19, from an initial estimate of 4.2 percent. Similarly, the World Bank raised its projection to 4.4 percent, up from 3.7 percent forecast in June 2025.
PwC Nigeria's Economic Outlook 2026 projects real GDP growth to expand to about 4.3 percent in 2026, supported by higher crude oil production and stronger performance in dominant services sectors. This would represent Nigeria's fastest growth pace in four years.
Climbing Economic Rankings
According to IMF projections reported by The Cable, Nigeria is expected to overtake Algeria to become Africa's third-largest economy in 2026. Nigeria's GDP is forecast to rise to $334 billion, positioning it behind South Africa ($443 billion) and Egypt ($399 billion), but ahead of Algeria ($284 billion).
The IMF also identified Nigeria as one of the key contributors to global economic growth in 2026, with the country's economy projected to expand faster than those of Germany, the United States, Japan, and approximately three times faster than South Africa's growth rate.
Business Confidence Rising
A survey by PwC revealed that 91 percent of Nigerian CEOs expect the economy to improve in 2026, up from 64 percent in 2025. Additionally, 56 percent are very or extremely confident in their organization's revenue growth, compared with just 30 percent globally.
The improved outlook is attributed to macroeconomic stabilization following President Tinubu's reforms in 2025, including removal of fuel subsidies, foreign exchange liberalization, and tighter fiscal discipline. Inflation has eased from historic highs of 35 percent, with November 2025 recording 14.45 percent, while external reserves have risen to a seven-year high of $47 billion.
Remaining Challenges
However, economist Dele Kelvin Oye, Chairman of the Alliance for Economic Research and Ethics, warned that the 2026 budget risks repeating longstanding fiscal mistakes. He expressed concern that debt servicing and personnel costs exceeded government revenue in early 2025, reaching as high as 131 percent in some estimates.
The World Bank also cautioned that between 139 million and 141 million Nigerians are estimated to be living below the poverty line, partly due to uneven impact of reforms, insecurity in food-producing regions, and rising debt-servicing costs.
