Nigeria growth outlook risks rise as analysts warn stalled budgets and pre election politics could weaken the IMF’s 2026 forecast

The International Monetary Fund raised Nigeria’s economic growth projection to 4.4 per cent for 2026 in its latest World Economic Outlook, but analysts warned on Tuesday that stalled budgetary progress and intensifying pre election politicking could undermine the optimistic assessment.

Also read: IMF warns central banks against hasty rate cuts amid inflation risks

The IMF said in its January 2026 report that Nigeria would anchor growth across sub Saharan Africa, where economic expansion is projected to strengthen to 4.6 per cent in both 2026 and 2027, supported by macroeconomic stabilisation and reform efforts in key economies.

The revised forecast aligns closely with Afrinvest’s 4.3 per cent growth estimate for Nigeria in 2026, as outlined in its Macroeconomic Outlook Report.

Afrinvest attributed the projection to strategic private sector investments spanning telecommunications, oil and gas, agriculture, and finance, alongside anticipated foreign portfolio inflows driven by Nigeria’s elevated yields.

EnterpriseNGR, a professional policy and advocacy group, also projected growth of 4.49 per cent, citing broad based expansion across services, agriculture, trade and telecommunications as key drivers.

Despite the positive projections, analysts cautioned that Nigeria growth outlook risks remain pronounced.

Afrinvest said poor management of global geopolitical alignments, heightened political activity ahead of elections, and delays in passing the 2026 budget could materially weaken economic momentum, particularly given persistent structural challenges such as insecurity and weak infrastructure.

The firm also highlighted external pressures, noting that global trade volume growth is expected to slow to 2.6 per cent in 2026 from 4.1 per cent in 2025.

Such conditions could affect Nigeria disproportionately, as crude oil accounts for about 85 per cent of total exports and is expected to contribute roughly 35.6 per cent of the Federal Government’s projected revenue.

President Bola Tinubu presented a N58.18tn 2026 Appropriation Bill to the National Assembly, but the budget has yet to be passed into law.

Proposed spending includes N26.08tn for capital expenditure and N15.52tn for debt servicing, with a projected deficit of N23.85tn.

EnterpriseNGR maintained a cautiously optimistic view of the oil and gas sector, projecting modest gains supported by improved security and operational stability.

The group expects crude oil production to average 1.5 million barrels per day in 2026, with Brent crude prices around 61 dollars per barrel and Nigerian Bonny Light trading at a premium.

Analysts stressed that disciplined fiscal management, political de escalation and people centred policies would be decisive in sustaining growth.