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Nigeria’s medium-term growth outlook has been revised downward, with the World Bank trimming its 2026 GDP projection to 4.1 percent, citing persistent structural constraints and rising global uncertainties.
The downgrade, contained in the April 2026 Africa Economic Update titled “Making Industrial Policy Work in Africa,” represents a cut from the 4.4 percent forecast issued in October 2025. Growth projections for 2027 were also trimmed to 4.2 percent, while output is expected to edge up slightly to 4.3 percent in 2028.
Despite the downward revision, the World Bank said Nigeria’s growth path remains supported by improving macroeconomic stability and a gradual recovery in investment. However, the expansion is expected to remain uneven, with the services sector—particularly ICT, financial services, and real estate—continuing to drive activity, while agriculture and industry lag due to entrenched structural bottlenecks.
Inflation is projected to moderate significantly over the forecast period, easing from 23 percent in 2025 to 14.9 percent in 2026, and further to 10.7 percent by 2028, reflecting the lagged impact of policy tightening and improving supply conditions. While easing price pressures are expected to support household purchasing power, the pace of poverty reduction may remain slow, weighed down by elevated fuel prices linked to ongoing tensions in the Middle East.
The bank noted that higher oil prices could strengthen Nigeria’s fiscal and external balances, providing some buffer against economic shocks. However, it cautioned that the benefits may be partly offset by capital flow volatility, tighter global financial conditions, and lingering domestic risks, including security concerns and policy uncertainty ahead of the 2027 general elections. These factors, it warned, could dampen business sentiment and slow reform momentum.
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Across Sub-Saharan Africa, growth is projected to remain steady at 4.1 percent in 2026, unchanged from 2025 but 0.3 percentage points below earlier estimates. The World Bank said several major economies, including Angola, Kenya, Mozambique, Nigeria, Senegal, South Africa, and Zambia, recorded downward revisions, with about 60 percent of countries in the region seeing weaker growth forecasts.
Even so, the report noted that economic activity across the region continues to benefit from improved macroeconomic stabilisation, including moderating inflation, stronger domestic currencies, and easing fuel and food prices, which have supported private consumption and investment. Higher commodity prices, particularly for precious metals and beverages, have also boosted export earnings and government revenues, while trade has remained relatively resilient despite ongoing global tensions.
From a demand perspective, Nigeria’s growth in 2026 is expected to be driven largely by private consumption and investment. Household spending is projected to contribute 1.6 percentage points to GDP growth, slightly lower than in 2025, while investment is expected to contribute 1.0 percentage point, reflecting modest improvements in investor confidence.
On the supply side, the services sector is forecast to account for about half of total growth, led by finance, ICT, wholesale and retail trade, and tourism. However, the World Bank warned that rising external risks, particularly the escalating conflict in the Middle East, could trigger higher energy prices, disrupt trade flows, and reignite inflationary pressures, posing a downside risk to both Nigeria’s outlook and broader regional recovery.
