PwC Nigeria’s H2 2026 Economic Outlook examines Nigeria’s economic performance in the first half of the year and the next phase of the country’s reform journey. Macroeconomic conditions have continued to improve, supported by greater foreign-exchange stability, moderating inflation, stronger external reserves, higher revenue mobilisation and increased capital inflows. The next step is to translate these gains into stronger household incomes, higher productivity, more jobs, and broader-based economic growth.
Nigeria entered the second half of 2026 from a stronger macroeconomic position. Real GDP grew by 3.89% year-on-year in Q1 2026, supported by ICT, Finance & Insurance, Construction and Agriculture. Headline inflation moderated to 15.91% in June, while the naira remained broadly stable at ₦1,379.68/US$. Gross foreign reserves rose by 38.3% year-on-year to US$51.46 billion in June, providing a stronger external buffer and supporting confidence in the foreign-exchange market.
On the other hand, household affordability remains under pressure, private-sector financing conditions are still tight, and growth remains concentrated in a relatively narrow group of sectors. External risks have also increased, particularly through geopolitical tensions, energy-market volatility and weaker global growth. These factors will influence how quickly Nigeria can move from macroeconomic stabilisation to more inclusive and sustainable growth.
Economic activity remained resilient in the first half of the year, but the pattern of growth was uneven. GDP growth in Q1 was driven by stronger activity in ICT, Finance & Insurance, Construction and Agriculture. At the same time, the PMI weakened during the second quarter, recovering only marginally to 50.1 in June. Agriculture remained in expansion, while industry, services and new orders were below the 50-point threshold. Seventeen of the 36 subsectors tracked were in contraction, highlighting the continued pressure on parts of the real economy.
Foreign exchange conditions strengthened, there was improved official-market liquidity, and larger external buffers supported naira stability, while capital importation rose to US$10.37 billion in Q1 2026. Yet the composition of these flows remain important. Foreign portfolio investment accounted for US$9.86 billion, or 95.1% of total capital inflows, while FDI accounted for only 1.3%. This underscores the need to convert improved investor confidence into longer-term investment in productive assets, businesses, and infrastructure.
Fiscal revenue also strengthened, although execution pressures remain. Total distributable FAAC revenue rose to ₦2.55 trillion in June, supported by stronger statutory revenue and VAT collections. At the same time, revenue performance against budget targets has been uneven, while continued spending requirements, government borrowing, and overlapping budget cycles may constrain fiscal flexibility and the pace of capital-project delivery.
For households, improvements in headline inflation have provided limited relief. Food inflation rose to 17.52% in June, while the cost of a healthy diet reached ₦1,589 per adult per day in April. Buying conditions for consumer durables, vehicles, and property also remained weak; reflecting the continued pressure of essential spending on household budgets.
The next phase of the reform programme will need to focus on how improved macroeconomic conditions translate into stronger economic outcomes for households and businesses. The Outlook identifies four areas that will be critical to unlocking the reform dividend.
Nigeria’s economic outlook remains positive, although the second half of the year will continue to be shaped by domestic and external risks. Real GDP growth is projected at 4.2% for 2026, supported by higher crude oil production and stronger performance in dominant sectors. Inflation is expected to moderate, although food-price pressures, other supply-side shocks and pre-election spending could create upside risks.
The naira is expected to remain broadly stable, supported by improved external buffers and foreign-exchange market reforms, but it remains exposed to shifts in oil prices, capital flows and domestic FX demand. Monetary policy is expected to remain relatively tight, with room for gradual rate reductions if the decline in inflation is sustained. Fiscal pressures may also persist as continued spending needs, the budget deficit, and government financing requirements place demands on available resources.
The central task for Nigeria in H2 2026 is therefore not simply to preserve macroeconomic stability. It is to make that stability work more effectively for households and businesses. Progress will depend on lowering essential costs, expanding access to finance, improving infrastructure and productivity, and converting stronger investor interest into productive investment and jobs.
Successfully navigating this next phase would allow Nigeria to move beyond stabilisation and begin unlocking the broader reform dividend through stronger incomes, improved welfare and more inclusive economic growth.
