Daniel Adaji
Nigeria could slide back into economic decline in 2026 if recent stabilisation gains are not firmly consolidated and protected from policy inconsistency, the Nigerian Economic Summit Group (NESG) has warned.
In its recently released 2026 Macroeconomic Outlook, NESG said Nigeria has reached a “decisive inflection point” where policy choices in 2026 will determine whether recent reforms translate into sustainable growth or are eroded by weak implementation and reform fatigue.
“Nigeria now stands at an inflection point, where the choices made in 2026 will determine whether recent reforms are institutionalised and translated into broad-based welfare improvements, or whether fragile gains are eroded by policy inconsistency, reform fatigue, and implementation gaps,” the report stated.
Stabilisation gains, but still fragile
According to the Outlook, Nigeria recorded clearer signs of recovery in 2025 following two years of difficult reforms. Real GDP growth improved to about 3.8 per cent in the first three quarters of 2025, up from 3.2 per cent in the same period of 2024, driven mainly by the Services and Industrial sectors.
Inflation also moderated sharply, falling to 14.5 per cent in November 2025 from over 24 per cent in early 2024, marking the lowest level since May 2022. The foreign exchange market showed improved stability, with the average gap between the official and parallel market exchange rates narrowing to less than 3 per cent in 2025.
External buffers strengthened as foreign reserves rose to a seven-year high of about US$45.5 billion, supported by stronger exports, reduced fuel imports and a successful Eurobond issuance that was oversubscribed by about US$13 billion.
“These improvements signal a clear break from the crisis conditions of the past,” NESG noted, adding that they reflect “the early success of a tight but more balanced monetary policy” and improved policy credibility.
Despite these gains, the report warned that Nigeria’s recovery remains fragile. Economic growth, NESG said, is still “below the level required for meaningful job creation and poverty reduction,” especially in a country with a rapidly expanding labour force.
While non-oil tax revenues improved in 2025, fiscal pressures persisted as development spending was compressed and debt service obligations remained elevated. Nigeria’s public debt rose to about ₦152.4 trillion by mid-2025, while debt service absorbed a growing share of government revenue, limiting fiscal space for infrastructure and social investment.
“Fiscal pressures continue to constrain development spending, productivity in Agriculture and Manufacturing sectors is subdued, and cost-of-living pressures remain elevated,” the report stated.
NESG warned that failure to consolidate reforms in 2026 could reverse recent gains. Under what it described as a “Sub-optimal Consolidation Pathway,” weak or fragmented implementation could result in “renewed macroeconomic fragility, slower growth, and persistently high inflation.”
Under this scenario, “investor confidence weakens, fiscal and external buffers come under renewed pressure, and social tensions rise as the benefits of reform fail to materialise at scale,” the report said.
By contrast, a successful consolidation could raise growth, sustain disinflation toward the mid-teens and eventually single digits, and stabilise the exchange rate through higher reserves and diversified exports.
NESG stressed that consolidation, not policy reversal, should be the central macroeconomic priority for 2026.
“Stabilisation is necessary, but it is not sufficient on its own,” the report warned, describing consolidation as “the bridge between short-term stabilisation and a future acceleration phase.”
The group urged policymakers to focus on credible macroeconomic anchoring, structural transformation of key sectors, stronger institutions and deliberate investments in human capital and social protection.
“The task before all stakeholders is to transform stabilisation into shared prosperity, restore confidence in long-term investment, and ensure that economic progress translates into improved livelihoods for all Nigerians,” NESG said.
