The World Bank has raised Nigeria’s economic growth forecast for 2026 to 4.3 percent but warned that increased government spending ahead of the 2027 general elections could put pressure on recent economic reforms.
The projection, contained in the World Bank’s October 2026 Africa Economic Update, is an improvement from the 4.0 percent growth recorded in 2025. The bank expects Nigeria’s economy to expand by 4.4 percent annually in 2027 and 2028.
The upgraded outlook reflects improving macroeconomic stability, stronger investor confidence and a gradual recovery in private investment.
Election spending poses a risk
Despite the stronger growth outlook, the World Bank cautioned that rising government spending as Nigeria approaches the 2027 elections could weaken the momentum of economic reforms.
The bank warned that reform programmes could become harder to sustain during periods of heightened political competition, particularly if governments face pressure to increase spending.
It also noted that public support for reforms could weaken if the measures do not produce visible improvements in living standards within a reasonable period.
The concern comes as Nigeria continues to manage the effects of major economic reforms, including changes to fuel subsidies and foreign exchange policies.
Q2 growth strengthens outlook
The revised forecast follows stronger economic activity recorded in the second quarter of 2026.
Nigeria’s real GDP grew by 4.43 percent year-on-year in Q2 2026, compared with 4.23 percent in the same period of 2025.
Agriculture expanded by 4.39 percent, while services grew by 4.6 percent. Real oil GDP increased by 7.3 percent, although the oil sector contributed only 0.2 percentage points to overall growth.
Industrial growth, however, slowed to 4.0 percent from 7.5 percent a year earlier, showing that the recovery remains uneven across sectors.
The World Bank identified financial services, information and communications technology, and real estate among the sectors supporting Nigeria’s expansion.
Inflation expected to ease
The World Bank also expects Nigeria’s inflation rate to continue declining as monetary tightening, exchange-rate stabilisation and improved supply conditions take effect.
Inflation is projected to fall from 23.0 percent in 2025 to 15.7 percent in 2026 and further to 12.2 percent by 2028.
Lower inflation could gradually improve household purchasing power and help reduce pressure on living costs.
However, the bank stressed that stronger GDP growth alone would not be enough to significantly improve living standards.
Jobs remain the bigger challenge
The World Bank said the next major test for Nigeria and other African economies is converting stronger economic growth into productive employment and better incomes.
Nigeria needs to absorb about 3.5 million people entering the labour force every year, making job creation a critical part of sustaining the country’s economic recovery.
Across Sub-Saharan Africa, the World Bank raised its 2026 growth forecast to 4.3 percent from 4.1 percent, citing stronger domestic demand, improved macroeconomic resilience and investment linked to the energy transition and digital technologies.
The bank also warned of broader risks, including prolonged conflict in the Middle East, high global interest rates, climate shocks, insecurity and elevated debt-servicing costs.
It said African governments should also explore practical applications of artificial intelligence to improve productivity, support businesses and create jobs.
For Nigeria, the improved growth forecast provides a more positive economic outlook, but the World Bank’s warning highlights the need to maintain reform momentum while ensuring that growth translates into jobs, higher incomes and improved living conditions.
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