The Central Bank of Nigeria (CBN) is anchoring its confidence in the sustainability of recent financial sector reforms on stronger economic growth and a continued easing of inflation in 2026, as outlined in its latest macroeconomic outlook.
In its projections released last week, the CBN forecast economic growth of 4.49 percent in 2026, alongside a moderation in inflation to an average of 12.94 percent. The apex bank said these improvements would play a critical role in consolidating gains from wide-ranging monetary, foreign exchange and financial sector reforms implemented over the past two years.
According to the CBN, expansion in monetary aggregates slowed over the past year compared with the preceding period, reflecting a tighter money market environment driven by higher interest rates. However, in September 2025, the Bank adjusted its policy stance to support domestic growth and investment as inflationary pressures eased. Despite the earlier tightening cycle, the banking system remained stable, with key financial soundness indicators broadly within regulatory thresholds, supported by effective oversight and strengthened macro-prudential frameworks.
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Looking ahead to 2026, the apex bank said improved growth and moderating inflation would be underpinned by a more stable foreign exchange market and higher oil output following key structural reforms. It is projected that Nigeria’s foreign exchange reserves would rise to $51.04 billion, while borrowing costs are expected to decline, creating room for increased private sector activity. These developments, the Bank noted, would reinforce its broader reform agenda aimed at building a stronger, more resilient and globally competitive economy.
The past year marked a turning point for Nigeria’s macroeconomic management, shaped by global uncertainty, difficult domestic adjustments and far-reaching institutional rebuilding. Within this challenging environment, the CBN, under the leadership of Olayemi Cardoso, governor, undertook a series of policy actions focused on restoring macroeconomic stability, rebuilding investor confidence and strengthening credibility in the financial services sector.
For many analysts, the pace of reform and stabilisation achieved in the past year sets the stage for even stronger outcomes in 2026. Reflecting on the reform process, Cardoso said the Bank had made measurable progress while remaining conscious of the work still required.
“I am pleased to report meaningful progress on all three fronts, even as we remain fully aware of the work ahead. Our actions continue to reflect the policy direction we articulated from the outset. We said what we would do, and we have done it, transparently and consistently,” he said.
The CBN said its key priorities for the year ahead centre on sustaining disinflation, strengthening growth, boosting foreign reserve buffers and expanding non-oil export earnings. In its economic outlook, the Bank projected that external reserves would rise to $51.04 billion in 2026, signalling renewed confidence following two years of sweeping reforms under President Bola Tinubu’s administration. These reforms, particularly in the oil, tax and foreign exchange markets, are expected to sustain economic expansion and price stability.
The apex bank also projected stronger non-oil growth and a more resilient external position. According to the report, growth prospects for 2026 remain positive, supported by continued gains from broad-based structural reforms and improved exchange rate stability. It added that easing monetary policy, as inflation moderates, would further support growth through a gradual reduction in lending costs.
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At its November year-end meeting, the CBN retained the monetary policy rate at 27 percent, opting to allow inflation to cool further, while trimming the deposit rate. The decision, which surprised some economists who had anticipated a more aggressive rate cut following September’s policy easing, was interpreted as a cautious but confident signal about the economy’s trajectory.
According to Cardoso, Nigeria’s economy has shifted from crisis management to laying the foundation for sustainable recovery over the past 12 months. After nearly a decade in which real GDP growth averaged about 2 percent, reforms have restored momentum and confidence across the macroeconomic environment.
“Our economy grew by 4.23 percent in the second quarter of 2025, the strongest pace in four years, driven by improvements in telecommunications, financial services and oil production,” he said.
He also noted that inflation, while still elevated, has moderated significantly. From a peak of 34.6 percent in November 2024, inflation fell to 14.50 percent in November 2025, marking eight consecutive months of disinflation. This steady decline, he said, is helping to restore real purchasing power for households and businesses, while signalling Nigeria’s return to orthodox monetary policy.
“The current double-digit rate cannot be acceptable. Price stability is the foundation of sustainable growth,” Cardoso said, adding that the Bank’s transition toward an inflation-targeting framework is gaining traction through improved data analytics, stronger communication and the end of monetary financing of fiscal deficits.
CBN models project continued disinflation in 2026, supported by stronger domestic production, improved foreign exchange liquidity and more disciplined liquidity management. As inflation becomes firmly anchored, the Bank said it would calibrate interest rates in line with evolving economic data.
On the external sector, the CBN said the projected increase in reserves builds on strong performance in 2025, when Nigeria recorded an estimated balance of payments surplus of $5.80 billion, and reserves rose to $45.01 billion from $40.19 billion in 2024. Relative stability in the foreign exchange market was driven by domestic reforms, higher capital inflows, increased export receipts and expanding local refining capacity, trends expected to strengthen further in 2026.
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The Bank projected that the current account surplus would rise sharply to $18.81 billion in 2026, supported by strong exports, steady diaspora remittances, higher oil and gas output, improved refining capacity and rising demand from key trading partners. Portfolio inflows and external borrowing are expected to keep the financial account in a net borrowing position of $10.15 billion, while Nigeria’s International Investment Position is projected at a net borrowing position of $69.58 billion, as attractive yields draw capital inflows.
Baba Musa, director-general of the West African Institute for Financial and Economic Management, said recent gains in growth, inflation moderation and investment confidence mark important progress, but warned that sustaining recovery would require policy discipline and collaboration.
In his report titled “Nigeria’s Economic Outlook at a Turning Point,” Musa described the country’s economic trajectory as one of resilience, renewal and strategic recalibration. He said maintaining macroeconomic stability, deepening structural reforms and ensuring that growth translates into tangible benefits for citizens remain critical challenges.
“Achieving this requires collaboration among government, the private sector, civil society and development partners,” he said, adding that policy consistency, human capital investment and inclusive growth will determine whether Nigeria emerges as a more competitive and equitable economy.
Musa said global headwinds remain significant, with slower global growth and geopolitical risks affecting trade and investment. Against this backdrop, he said Nigeria has shown determination through fiscal consolidation and targeted monetary reforms, laying the groundwork for sustainable growth.
The growth outlook, he noted, is supported by stronger oil production following sector reforms, recovery in services such as telecommunications, finance and transport, and improved agricultural output driven by favourable weather and mechanisation. He added that recent GDP rebasing has provided a clearer picture of growth in high-potential sectors, including digital services, modular refining and creative industries.
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International institutions have echoed this cautious optimism. The World Bank recently projected three consecutive years of growth for Nigeria, estimating expansion of 3.6 percent in 2025, 3.7 percent in 2026 and 3.8 percent in 2027. This outlook contrasts with a weaker global environment, as the Bank cut its global growth forecast for 2025 to 2.3 percent amid higher tariffs and policy uncertainty.
Despite the challenging global backdrop, the World Bank projects growth in Sub-Saharan Africa to strengthen to 3.7 percent in 2025 and average 4.2 percent in 2026 and 2027, assuming inflation declines and external conditions stabilise. It noted that the region is one of the few expected to see growth acceleration during the forecast period.
For the CBN, the message is clear: stronger growth and sustained disinflation are central to locking in the gains of recent reforms. As Nigeria enters 2026, the Bank is betting that policy consistency, macroeconomic stability and structural transformation will turn reform momentum into lasting economic progress.