Nigeria’s growth holds steady despite global shocks, World Bank says

Nigeria’s economic growth outlook for 2026 remains intact despite mounting global pressures triggered by the ongoing Iran conflict and rising energy prices, the World Bank has said.

The bank’s Lead Economist for Nigeria, Fiseha Haile, disclosed this during a presentation in Abuja, noting that business activity across the country has continued to expand even as external shocks ripple through global markets.

While the resilience offers some relief, the bank warned that underlying pressures, particularly inflation and higher fuel costs, are beginning to weigh on household incomes and could slow poverty reduction if not contained.

The latest assessment comes at a time when the federal government is implementing economic reforms aimed at stabilising the macroeconomic environment, even as global geopolitical tensions continue to drive uncertainty in commodity markets.

Inflation pressures threaten fragile gains

Although growth has remained stable, the World Bank stressed that inflation remains a major concern, with rising prices continuing to erode purchasing power across the economy.

Haile explained that while the direct impact of global shocks on growth appears limited so far, the indirect effects, especially through inflation, are more pronounced. According to him, fuel prices have surged by over 50 per cent amid tensions in the Middle East, pushing up transportation, food, and production costs nationwide.

Recent data shows inflation has moderated to 15.06 per cent as of February 2026, down from around 33 per cent in late 2024. However, the bank cautioned that the current level remains high compared to regional peers and still poses risks to economic stability.

Despite these pressures, Nigeria’s external reserves have shown improvement, helping to reduce exchange rate volatility. At the same time, fiscal indicators present a mixed picture, with the deficit widening slightly to 3.1 per cent of GDP in 2025, even as the debt-to-GDP ratio recorded its first decline in a decade.

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The bank projects Nigeria’s economy will grow by about 4.2 per cent in 2026, underscoring the country’s ability to withstand external shocks, albeit with vulnerabilities.

Reform momentum and social risks in focus

Beyond macroeconomic indicators, the World Bank highlighted deeper structural concerns, particularly in human development, warning that economic growth alone may not translate into improved living conditions.

The bank pointed to troubling indicators in early childhood development, including high under-five mortality rates and widespread stunting, as evidence of persistent gaps in health, nutrition, and education systems.

To sustain growth and translate it into broader welfare gains, the institution advised policymakers to maintain tight monetary policies, save windfalls from higher oil prices, and avoid broad-based subsidies that could strain public finances.

It also reaffirmed its medium-term outlook, projecting stronger growth ahead, with Nigeria’s economy expected to expand further alongside broader gains across Sub-Saharan Africa, provided reforms remain consistent and effectively implemented.