Despite easing inflation and stronger macro stability, risks from global tensions and policy uncertainty cloud recovery path…..
Nigeria’s economic recovery may not be as strong as previously expected, as the World Bank has trimmed its growth projections for the country, pointing to a more gradual expansion in the coming years.
In its latest Africa Economic Update titled “Making Industrial Policy Work in Africa,” released in April 2026, the global lender revised Nigeria’s GDP growth forecast for 2026 downward to 4.1 percent, a drop from the 4.4 percent projection issued in October 2025.
The outlook for subsequent years also reflects a more cautious stance. Growth is now projected at 4.2 percent in 2027 and 4.3 percent in 2028, signalling a steady but slower pace of expansion than earlier anticipated.
According to the report, Nigeria’s growth will continue to be supported by improving macroeconomic stability and a gradual rebound in investment. However, the pace of progress is expected to remain uneven across sectors.
The services sector particularly ICT, finance, and real estate is forecast to remain the primary driver of economic activity. In contrast, agriculture and industry are likely to lag due to persistent structural challenges that continue to limit productivity and output.
On inflation, the World Bank offered a more optimistic outlook. Price pressures are expected to ease significantly, with inflation projected to decline from 23 percent in 2025 to 14.9 percent in 2026, before dropping further to 10.7 percent by 2028. This moderation is attributed to tighter monetary policies and gradually improving supply conditions.
Even so, the institution warned that the benefits of lower inflation may take time to translate into meaningful improvements in living standards. Poverty levels, while expected to decline, are likely to do so slowly partly due to sustained high fuel costs linked to geopolitical tensions in the Middle East.
The report also highlighted a complex external environment. While rising oil prices could boost government revenues and strengthen Nigeria’s fiscal position, these gains may be offset by volatile capital flows and broader global uncertainty.
Domestically, concerns remain about factors that could dampen economic momentum. These include fluctuating commodity prices, tighter global financial conditions, security challenges, and policy uncertainty in the lead-up to the 2027 general elections.
Regional Picture: Sub-Saharan Africa Faces Similar Pressures
Beyond Nigeria, the World Bank noted that growth across Sub-Saharan Africa is also facing headwinds. The region’s economy is projected to expand by 4.1 percent in 2026, unchanged from 2025 but 0.3 percentage points lower than earlier forecasts.
Several major economies including Angola, Kenya, Mozambique, Nigeria, Senegal, South Africa, and Zambia have all seen downward revisions to their growth outlooks. In total, about 60 percent of countries in the region experienced forecast cuts for 2026.
Despite this, the report acknowledged improvements in macroeconomic stability across the region. Better inflation control, stronger currencies, and easing food and fuel prices have supported consumer spending and investment, while more credible policy frameworks are helping to build resilience.
Higher global prices for commodities such as precious metals and agricultural products have also strengthened export earnings and government revenues in many countries.
However, these gains remain fragile. The World Bank cautioned that escalating tensions in the Middle East could disrupt trade, push up energy costs, and reignite inflationary pressures posing fresh risks to the region’s recovery.
What Will Drive Growth
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 down from 2025, while investment is expected to play a bigger role, contributing 1.0 percentage point.
On the supply side, the services sector is set to dominate, accounting for roughly half of total economic growth. Key drivers include finance, ICT, wholesale and retail trade, and tourism industries that continue to show resilience despite broader economic pressures.
As Nigeria navigates a delicate recovery path, the World Bank’s revised outlook underscores a familiar theme: progress is being made, but the road ahead remains uncertain, shaped by both domestic reforms and an increasingly unpredictable global environment.
