Cost-of-living pressures remain elevated, says NESG
Nigeria has entered a phase of economic consolidation following two years of reforms that helped to steady inflation, stabilise the exchange rate and restore investor confidence.
Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, gave the outlook while delivering the keynote address at the presentation of the Nigerian Economic Summit Group (NESG) 2026 Macroeconomic Outlook Report in Lagos yesterday.
He said that after two years of tough but necessary reforms, Nigeria has recorded measurable macroeconomic stability and is now positioned to build on those gains.
According to him, the focus has shifted to sustaining the reforms already implemented and translating economic stability into growth that creates jobs and improves living standards.
Looking ahead to 2026, Edun projected stronger economic performance, with GDP growth expected to reach 4.68 per cent, inflation averaging 16.5 per cent, and the exchange rate stabilising around N1,400 to the dollar.
“Nigeria,” Edun stressed, “cannot afford to pause or retreat,” adding that “success in consolidation will determine whether stability becomes sustained growth and creates jobs.”
He noted that recent economic indicators show improvement, explaining that inflation has slowed, pressure on the foreign exchange market has eased, external reserves have strengthened and investor confidence is gradually returning.
Addressing concerns over the size of Nigeria’s debt, Edun said much of the N152 trillion public debt figure is the result of improved transparency and changes in exchange rate policy, rather than reckless borrowing.
He explained that about N30 trillion of the figure represents previously unrecorded Ways and Means advances that have now been properly captured, while close to N50 trillion arose from the revaluation of foreign loans following exchange rate reforms.
Edun added that Nigeria’s debt profile remains moderate when viewed against the size of the economy, noting that the debt-to-GDP ratio has declined to 36.1 per cent, which, in his words, “is among the lowest in Africa and far below the global average.”
He pointed to stronger macroeconomic indicators as evidence that the economy is on a stable path.
Inflation, he said, fell from 33.18 per cent in 2024 to 14.45 per cent by November 2025, while economic growth averaged 3.78 per cent by the third quarter of 2025, with 27 sectors, including manufacturing and agriculture, recording expansion.
He added that Nigeria’s external reserves rose to $45.5 billion, the exchange rate stabilised below N1,500 to the dollar, and the country recorded a trade surplus of N19.33 trillion in the first nine months of 2025.
According to him, market capitalisation on the Nigerian Exchange also grew by almost 60 per cent year-on-year.
Despite revenue challenges, particularly in the oil and gas sector, Edun said the Federal Government maintained fiscal discipline in 2025, with the fiscal deficit kept at about 3.4 per cent of GDP, while non-oil revenue performance improved.
He said allocations to states increased to strengthen fiscal federalism and support subnational governments, while capital budget implementation improved, with about 84 per cent of 2024 capital projects executed during the transition period.
Edun said the 2026 budget, presented by President Bola Ahmed Tinubu, is designed as a Budget of Consolidation, Renewed Resilience and Shared Prosperity.
The budget proposes total spending of N58.18 trillion, with N26 trillion allocated to capital expenditure, representing about 44 per cent of total spending.
He added that the projected budget deficit of about four per cent of GDP is tied directly to Nigeria’s development needs, especially investment in infrastructure and growth-supporting sectors.
Outlining key structural reforms planned for 2026, Edun said the measures are aimed at improving efficiency and protecting vulnerable Nigerians.
Government revenue collection will be fully digitised, treasury operations will become more transparent, and opaque deductions and leakages will be eliminated.
He said the government will also implement tax laws designed to protect low-income earners and small businesses, noting that essential food items and small enterprises will be exempted, while efforts will be intensified to fairly widen the tax base.
According to him, the overall goal is to build a stronger, more resilient economy that delivers growth and shared prosperity for Nigerians.
After two years of implementing transformative and politically difficult reforms, Edun said the administration has delivered significant macroeconomic stabilisation.
He said the country is now at the threshold of stabilisation, which demands discipline and policy consistency, stressing that Nigeria cannot afford to pause, retreat or relapse.
“And that’s a big undertaking, and success here will determine whether stability is converted into sustained growth, whether growth delivers productive jobs, and whether poverty is reduced at scale,” he said.
He added that the government’s task is to consolidate reform gains and turn economic stability into prosperity.
“And of course, prosperity becomes shared prosperity, where millions are lifted out of poverty,” he said.
Despite global headwinds and domestic constraints, Edun said Nigeria’s fiscal position has demonstrated resilience and marked improvement, reflecting discipline, improved transparency and focused reforms.
NESG: reforms unavoidable
Chairman of NESG, Mr Olaniyi Yusuf, said the timing of the outlook was deliberate.
“This report is not intended as a forecast in isolation, but as a strategic lens through which to assess where the Nigerian economy stands today, how far we have come, and what the next phase of reforms must deliberately achieve,” he said.
Yusuf said Nigeria has just emerged from one of the most disruptive adjustment periods in its recent economic history.
He explained that NESG frames the reform journey along a Stabilisation–Consolidation–Acceleration continuum, stressing that economic transformation is a sequenced and perpetual process.
He said the 2024–2025 period was defined by adjustments and corrections, with major structural reforms undertaken to address long-standing distortions in the exchange rate regime, energy pricing and monetary conditions.
“These reforms were not painless, but they were unavoidable. They represented the stabilisation phase of our reform journey,” he said.
According to him, signals of stabilisation began to emerge in 2025, with macroeconomic conditions reflecting a gradual transition from reform-induced dislocation, although structural weaknesses persist.
Following rebasing, he said headline inflation moderated sharply, falling from over 33 per cent in 2024 to around 21 per cent in 2025, supported by exchange rate stabilisation, slower administered price increases, particularly fuel, and other factors.
“FX market conditions improved, supported by policy reforms, elevated interest rates, reserve accretion and reduced petroleum import demand.
“The external balance strengthened, though largely through import compression rather than export diversification,” he said.
“The task ahead is to ensure that these sacrifices translate into opportunity, productivity and shared prosperity. Consolidation is the hard work of turning reform into results.”
NESG Chief Executive Officer, Dr Tayo Aduloju, said the 2026 Macroeconomic Outlook presents an opportunity to consolidate recent gains and advance Nigeria’s multi-year economic transformation roadmap, moving decisively from crisis-era stabilisation towards a more durable and inclusive growth path.
He said the report underscores the urgency of locking in fragile improvements, closing remaining macroeconomic and structural gaps, and avoiding policy reversals that could return the economy to instability.
According to him, while stabilisation efforts are beginning to yield results, persistent structural vulnerabilities remain.
He said: “Growth remains below the level required for meaningful job creation and poverty reduction, fiscal pressures continue to constrain development spending, productivity in agriculture and manufacturing is subdued, and cost-of-living pressures remain elevated.
“These realities make consolidation not a pause in reform momentum, but a decisive push to solidify gains and accelerate transformation.”
Aduloju said the outlook provides an evidence-based assessment of Nigeria’s macroeconomic conditions, evaluates the outcomes of recent reforms and sets out a strategic framework for consolidation, including scenario-based projections for 2026 and beyond.
“At its core, the report emphasises that sustained growth will depend on credible macroeconomic anchoring, structural transformation of key sectors, stronger institutions, and deliberate investments in human capital and social protection,” he said.
He added that stronger exports, reduced fuel imports and higher foreign exchange inflows supported a trade and current account surplus, contributing to the gradual rebuilding of external buffers.
“Foreign reserves reached their highest level in several years, and the spread between the official and parallel market exchange rates narrowed significantly, reflecting greater transparency and improved policy credibility,” Aduloju said.
According to him, the NESG Macroeconomic Conditions Index corroborates Nigeria’s transition from acute instability to a state of relative, though still fragile, macroeconomic stability.