The Nigerian Economic Summit Group (NESG) has projected that Nigeria’s economy will grow by 4.2 percent in 2026, driven by improved performance in the oil, manufacturing, agriculture and services sectors.
Gatekeepers News reports that the projection was contained in the NESG’s first-half 2026 State of the Economy report, titled “Turning Potential into Progress,” released on Wednesday.
The think tank said economic growth is expected to strengthen to 4.5 percent in the second half of 2026, bringing full-year Gross Domestic Product (GDP) growth to approximately 4.2 percent.
According to the NESG, the oil sector is expected to sustain its recovery on the back of improved domestic crude oil production, better security conditions and the gradual implementation of upstream reforms.
It added that increased domestic refining activity could further boost industrial output, reduce Nigeria’s dependence on imported refined petroleum products and strengthen the country’s external position.
“Moreover, manufacturing activity is expected to sustain growth momentum as lower inflation, continued exchange rate stability, and improved foreign exchange liquidity ease production constraints and strengthen business confidence,” the group said.
However, the NESG warned that manufacturing growth would remain constrained by structural challenges, including unreliable electricity supply, high borrowing costs, elevated logistics expenses and weak domestic demand.
The agricultural sector is also expected to benefit from improved rainfall and favourable harvest conditions, which could boost crop production and ease food supply pressures.
The group, however, cautioned that persistent insecurity in major food-producing regions and climate-related shocks, particularly flooding, could undermine expected gains in agricultural output.
The services sector, according to the report, will remain the primary driver of economic growth, with financial services expected to benefit from recent bank recapitalisation, stronger credit intermediation and improved investor confidence.
The Information and Communications Technology (ICT) sector is also projected to maintain strong growth, supported by increased digital adoption, rising data consumption and continued investment in telecommunications infrastructure.
Risks to growth outlook
The NESG identified several downside risks to Nigeria’s economic growth outlook in 2026, including global economic and geopolitical shocks, election-related uncertainty, insecurity and climate-related disruptions.
It warned that a sharper-than-expected slowdown in global economic activity, renewed trade tensions and tighter global financial conditions could weaken Nigeria’s export earnings, reduce foreign exchange inflows, constrain government revenues and increase pressure on the naira.
The group also cautioned that heightened political activities ahead of the 2027 general elections could weaken the momentum of reforms and put fiscal discipline under pressure through increased pre-election spending.
Persistent insecurity, particularly across the North-Central and North-West regions, could disrupt agricultural and mining activities as well as the movement of goods and services, while discouraging domestic and foreign investment, it said.
The NESG further warned that flooding and other extreme weather events could affect agricultural production, food supply chains and infrastructure, potentially worsening food inflation and limiting economic growth.
On the upside, the group said stronger-than-expected recovery in the oil sector, increased foreign capital inflows and faster implementation of structural reforms could push economic growth above its current projection.
It said higher crude oil production, sustained improvements in pipeline security, reduced oil theft, increased upstream investment and stronger global oil prices could boost export earnings, government revenues and foreign exchange reserves.
The NESG added that stronger policy credibility, improved foreign exchange market liquidity, greater exchange-rate stability and favourable sovereign credit-rating actions could attract more portfolio and foreign direct investment.
It said faster implementation of reforms in taxation, electricity, infrastructure and the business environment could improve productivity, reduce the cost of doing business and stimulate private investment and manufacturing-led growth.
NESG projects 15.5% inflation in 2026
On inflation, the NESG projected that consumer prices would remain elevated through the rest of 2026, with inflation averaging 15.5 percent in the second half of the year and across the full year.
The group attributed the outlook to persistent insecurity in major farming communities, climate-related disruptions, particularly flooding, and high transportation costs arising from logistics challenges.
It also said election-related spending, seasonal demand during the festive period and relatively high energy costs could create temporary cost-push inflationary pressures in the second half of the year.
However, the NESG said these pressures could be partly moderated by continued exchange-rate stability, the delayed impact of tight monetary policy and favourable base effects.
