Nigeria enters the second half of 2026 with stronger foreign-exchange buffers, a more stable naira and moderating headline inflation, but the gains have yet to translate into broad-based relief for households and businesses, according to PwC Nigeria’s latest economic outlook.
The professional services firm projects real GDP growth of 4.3 percent for 2026, supported by higher crude oil production and continued expansion in key sectors, but warns that the next phase of the reform programme will be judged by whether macroeconomic stability can generate stronger incomes, investment and productivity.
Nigeria’s macroeconomic position strengthened during the first half of the year, with real GDP expanding by 3.89 percent year-on-year in Q1 2026 and headline inflation easing to 15.91 percent in June.
The naira also remained stable at N1,379.68 per dollar, while gross foreign reserves climbed 38.3 percent year-on-year to $51.46 billion in June.
The stronger external position has provided greater support for the foreign-exchange market and improved investor confidence.
But PwC said the improvement in headline indicators masks continuing weakness across parts of the real economy.
According to the PwC assessment, the first-half expansion was driven principally by ICT, Finance & Insurance, Construction and Agriculture, while activity across several other parts of the economy remained subdued.
The Purchasing Managers’ Index (PMI) recovered only marginally to 50.1 in June, with agriculture remaining in expansion while industry, services and new orders stayed below the 50-point threshold.
17 of the 36 subsectors tracked were in contraction, according to PwC.
The uneven performance highlights a central challenge for the second half: ensuring that the recovery spreads beyond the sectors currently driving aggregate GDP growth.
“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,” PwC said.
The firm identified lower essential costs, greater access to finance, improved infrastructure and productivity gains as critical to converting stabilisation into more inclusive growth.
Foreign capital exposes investment gap
Nigeria’s stronger external position has also attracted significant foreign capital, but the composition of those inflows raises questions about the durability of the recovery.
Capital importation reached $10.37 billion in Q1 2026, with portfolio investment accounting for $9.86 billion, or 95.1 percent of total inflows.
Foreign direct investment, by contrast, accounted for only 1.3 percent.
PwC said the disparity underscores the need to convert improved investor sentiment into longer-term investment in productive assets, businesses and infrastructure.
The distinction is significant for Nigeria’s growth outlook because portfolio flows can strengthen foreign-exchange liquidity and market confidence but are generally more sensitive to changes in interest rates, market sentiment and global risk appetite.
A stronger recovery will require a greater share of capital directed towards productive capacity and job creation.
Households yet to feel recovery
The improvement in headline inflation is seen to have provided limited relief.
Food inflation rose to 17.52 percent in June, while the cost of a healthy diet reached N1,589 per adult per day in April, according to PwC’s review.
Consumer demand has also remained weak, with purchasing conditions for consumer durables, vehicles and property continuing to reflect pressure on household budgets.
The figures point to the gap between macroeconomic stabilisation and household welfare.
Lower headline inflation means prices are rising more slowly, but households continue to face high absolute prices for essential goods and services.
That limits discretionary spending and, in turn, constrains demand for businesses outside essential consumption.
Fiscal gains face execution pressure
Government revenues have also strengthened, with total distributable Federation Account Allocation Committee (FAAC) revenue rising to N2.55 trillion in June, supported by stronger statutory revenue and VAT collections.
However, PwC cautioned that revenue performance against budget targets remains uneven.
Continued spending requirements, government borrowing and overlapping budget cycles could restrict fiscal flexibility and slow the implementation of capital projects.
That creates another challenge for H2 2026: stronger revenue mobilisation will need to translate into effective public investment rather than being absorbed predominantly by recurrent and financing obligations.
Tight credit remains a drag
Private-sector financing conditions remain tight, posing a constraint on businesses seeking to expand capacity.
PwC said supporting micro, small and medium-sized enterprises (MSMEs) would be among the priorities required to unlock the benefits of the reform programme.
The firm also called for productivity improvements and stronger mechanisms for converting investor interest into productive investment.
The challenge is particularly important because GDP growth remains concentrated in a relatively narrow group of sectors.
Without broader access to finance and improvements in infrastructure and productivity, stronger aggregate growth may not produce a proportionate increase in employment and household incomes.
PwC expects the economy to expand by 4.3 percent in 2026, with higher crude production and stronger performance in dominant sectors supporting growth.
Inflation is expected to continue moderating, although food prices, supply-side shocks and increased government spending ahead of the 2027 elections could create renewed upward pressure.
The naira is also expected to remain stable, supported by improved external buffers and foreign-exchange market reforms.
However, the currency remains vulnerable to oil-price movements, capital-flow reversals and domestic demand for foreign exchange.
Monetary policy is expected to remain relatively tight, although the Central Bank of Nigeria could have room for gradual rate reductions if the decline in inflation proves sustained.
External risks are also becoming more prominent, with geopolitical tensions, energy-market volatility and weaker global growth potentially affecting Nigeria through crude prices, trade, capital flows and foreign-exchange earnings.
