World Bank forecasts Nigeria economic growth of 4.2% in 2026

The World Bank projects Nigeria's economy to grow by 4.2% in 2026. This outlook comes despite rising fuel costs and ongoing inflation pressures. These factors pose risks to household incomes and efforts to reduce poverty.

Business activity in Nigeria has been expanding. This suggests the economy is resilient. The U.S./Israel-Iran conflict has raised prices but has not greatly affected output.

Nigeria's President Bola Tinubu has introduced major economic reforms. These include ending fuel subsidies, devaluing the currency, and changing the tax system. These actions aim to stabilize the economy.

Inflation eased to 15.06% in February 2024. This was down from 33% in December 2024. However, inflation remains high and has increased due to the Middle East conflict. Fuel prices have risen by over 50% during this period. This increase impacts transport, food, and production costs. The World Bank suggests lifting limits on fuel imports to help control inflation.

High inflation is a risk to incomes and poverty reduction. Nigeria's foreign exchange reserves have improved. This has reduced currency volatility. However, tighter global money markets could affect foreign investment and borrowing.

Nigeria's fiscal deficit grew slightly to 3.1% of GDP in 2025. This is still lower than before reforms. The debt-to-GDP ratio fell for the first time in ten years. This was due to better fiscal management and exchange rate changes.

The World Bank advises Nigeria to save money from higher oil prices. It also recommends keeping monetary policy strict. And Nigeria should avoid general subsidies to control inflation. Beyond fixing immediate economic problems, Nigeria needs long-term reforms. Improving early childhood development is a key priority.