2026 Economic Outlook: Risks and opportunities as Nigeria moves into H2

Nigeria’s economy showed mixed performance in the first five months of 2026, with real GDP growth accelerating to 3.89% in Q1, up from 3.13% in Q1 2025. Non-oil sectors led expansion, with ICT and telecommunications growing at 10.98% and 12.24% respectively, while agriculture and construction also saw gains. Oil and gas remained subdued, contributing just 3.92% to GDP despite a 2.57% rise in crude petroleum output, highlighting Nigeria’s ongoing fiscal dependence on the sector. Capital inflows rebounded to $10.37 billion in Q1, driven primarily by portfolio investments, though Foreign Direct Investment dropped to $135.08 million. Foreign reserves neared $50 billion, supporting naira stability, while gross non-oil revenue exceeded projections at N6.52 trillion. The exchange rate improved to N1,363/$ by April, reflecting stronger FX inflows and policy adjustments. Global shocks, particularly the Iran-US conflict, sent Brent crude prices surging from $60.75 to $118 per barrel, boosting oil earnings but also increasing domestic fuel costs. Inflation climbed to 15.69% by April, the highest in 2026, while high interest rates (MPR at 26.5%) constrained credit. Analysts now expect Brent crude to average $90.44 in 2026, with risks of further price spikes if tensions persist. Domestic challenges persist, including insecurity disrupting agriculture, trade, and mining, alongside a 15.30% contraction in electricity supply. Pre-election tensions may exacerbate instability in H2, while geopolitical risks and high energy prices continue to pressure fiscal outcomes. The outlook for H2 hinges on whether global tensions ease or domestic reforms address structural bottlenecks.