The World Bank has upgraded Nigeria’s economic growth forecast for 2026 to 4.3 per cent, pointing to improved macroeconomic conditions, stronger investor confidence and a gradual rebound in private-sector investment.
The projection was contained in the bank’s October 2026 Africa Economic Update, titled Building AI Readiness, released on Tuesday. It also raised its growth forecast for Nigeria to 4.4 per cent for both 2027 and 2028, compared with an estimated 4.0 per cent growth recorded in 2025.
“Economic activity in Nigeria is projected to strengthen from 4.0 percent in 2025 to 4.3 percent in 2026, before edging up to 4.4 percent annually in 2027–28,” the bank said.
The revised outlook followed stronger-than-anticipated economic activity in the second quarter of 2026, when Nigeria’s real Gross Domestic Product grew by 4.43 per cent year-on-year, up from 4.23 per cent in the same quarter of 2025.
Agricultural output increased by 4.39 per cent during the period, compared with 2.82 per cent a year earlier, while the services sector expanded by 4.6 per cent. Real oil GDP also recorded a 7.3 per cent increase, although the sector accounted for only 0.2 percentage points of total growth.
Industrial growth, however, weakened considerably, falling to 4.0 per cent from 7.5 per cent in the second quarter of 2025, underscoring the uneven performance across key sectors.
The bank identified financial services, information and communications technology and real estate as important contributors to economic activity, supported by increased digitalisation and resilient domestic demand. It also expects agriculture to continue recovering in 2026, while industrial expansion could lose momentum amid weaker oil production and manufacturing growth.
Despite the brighter economic outlook, the World Bank cautioned that increased government expenditure ahead of the 2027 general elections could threaten the progress made through recent reforms.
“Nevertheless, the outlook remains subject to significant downside risks, including tighter global financial conditions, a prolonged conflict in the Middle East, insecurity, climate-related shocks, disruptions to oil production, and rising pre-election spending ahead of the 2027 elections.”
REA ALSO: World Bank Cuts Nigeria’s 2026 Growth Forecast To 4.1% Amid Economic Risks
It added, “These factors could weaken reform momentum and erode the social consensus needed to sustain ongoing macroeconomic adjustment efforts.”
The warning comes after a series of major economic changes introduced by the Federal Government since 2023, including the removal of petrol subsidies, reforms to the foreign exchange market and measures aimed at improving domestic revenue collection.
According to the World Bank, maintaining such politically difficult policies could become increasingly challenging as the 2027 elections draw closer, particularly with households still facing elevated living costs.
The bank noted that several sub-Saharan African countries had recently implemented difficult measures, including “fuel subsidy removal, exchange rate liberalisation, fiscal consolidation, and efforts to strengthen domestic revenue mobilization.”
It warned that intense political competition could weaken the willingness of governments to maintain reform programmes. Beyond a possible slowdown in policy changes, the bank said public support could also decline where painful reforms fail to deliver noticeable improvements in living standards within a reasonable timeframe.
Such a situation, it said, could make both governments and citizens less willing to back similar reforms in the future while increasing pressure for populist economic measures.
On inflation, the World Bank projected a continued decline, attributing the expected improvement to monetary tightening, greater exchange-rate stability and better supply conditions.
It forecast inflation to fall from 23.0 per cent in 2025 to 15.7 per cent in 2026 and reach 12.2 per cent by 2028.
“Lower inflation is expected to support household purchasing power and contribute to a gradual reduction in poverty,” the report said.
However, the bank warned that stronger GDP growth by itself would not necessarily translate into substantial improvements in living standards. It said poverty reduction remained slow because income per person was growing more slowly than the overall economy.
It further cautioned that higher fuel costs linked to the conflict in the Middle East could place additional pressure on poorer households and slow progress in reducing poverty.
Consequently, improvements in headline economic figures may not immediately ease the financial strain experienced by households, particularly where earnings and employment opportunities fail to match rising costs.
The World Bank also urged governments to avoid fiscal slippages as political pressures intensify. It noted that high debt-servicing costs were continuing to limit fiscal space, while inflation remained exposed to risks from exchange-rate depreciation, food-price increases and loose fiscal policy.
The institution stressed that preserving the independence of central banks and avoiding the use of monetary financing to fund government deficits would be essential to keeping inflation expectations under control as African countries approach election cycles and confront renewed global uncertainty.
Central Bank of Nigeria Governor, Olayemi Cardoso, had earlier said the apex bank was prepared to manage excess liquidity as Nigeria moves towards another election cycle.
“We are ready,” he said during a press briefing at the end of the 307th meeting of the CBN’s Monetary Policy Committee in Abuja, explaining that the bank had analysed previous election cycles and developed different scenarios.
He said the CBN would track currency in circulation, liquidity within the banking system, monetary aggregates and foreign exchange demand.
“We will proactively deploy any tools and instruments to mop up any excess liquidity,” Cardoso said. “We will not allow ourselves to be caught unaware in any form.”
Nigeria was among the African economies whose growth projections were revised upward by the World Bank, reflecting the impact of reforms and improvements in macroeconomic management.
Across sub-Saharan Africa, the bank raised its 2026 growth forecast to 4.3 per cent from 4.1 per cent in 2025, representing an increase of 0.3 percentage points from its April projection.
Nigeria was also among nearly three-quarters of countries in the region to receive an upward revision to their 2026 forecasts.
World Bank Chief Economist for Africa, Andrew Dabalen, said African economies had remained resilient despite difficult global conditions, including increased energy prices associated with disruptions arising from the Iran conflict.
The bank, however, said African countries needed to ensure that economic expansion translated into wider improvements in living standards.
It identified sustained reforms, stronger private investment, better infrastructure, improved human capital and increased productivity as essential to converting macroeconomic stability into tangible benefits for households.
The World Bank also called for faster adoption of artificial intelligence and other digital technologies across the continent, saying they could boost productivity and generate new employment opportunities.
It noted that African economies would need to take advantage of emerging technologies while addressing longstanding weaknesses in infrastructure, skills and access to digital services.
For Nigeria, the bank projected that the current-account surplus would rise from 4.8 per cent of GDP in 2025 to 6.0 per cent in 2026 before falling to 3.4 per cent by 2028, as crude oil prices return towards normal levels and import demand increases.
The institution further observed that Nigeria’s position as an oil exporter meant it was less directly exposed to the global energy shock than many other African economies. However, it said the country’s ability to withstand broader economic pressures would depend on the strength of its policy buffers and institutions.
While higher crude oil prices could strengthen Nigeria’s fiscal and external positions, the bank warned that volatile capital flows could offset part of the gains.