Nigeria’s economic growth is projected to strengthen in 2026, but the improvement is yet to translate into stronger gains in living standards, as high poverty and inflation continue to put pressure on households, the World Bank has said.
The World Bank raised its forecast for Nigeria’s real GDP growth to 4.3 per cent in 2026, from an estimated 4.0 per cent in 2025. It also projected growth of 4.4 per cent in both 2027 and 2028, citing improving macroeconomic stability, stronger investor confidence and a gradual recovery in private investment.
The projections were contained in the October 2026 edition of the World Bank’s Africa Economic Update, titled Building AI-Readiness, released on Tuesday. Nigeria was among nearly three-quarters of countries in Sub-Saharan Africa whose 2026 growth forecasts were revised upwards, according to the lender.
The improved outlook follows stronger economic activity in the second quarter of 2026, when Nigeria’s real GDP expanded by 4.43 per cent year-on-year, compared with 4.23 per cent in the corresponding quarter of 2025, according to the National Bureau of Statistics.
The World Bank said the services sector would remain a major driver of growth, supported by financial services, information and communications technology and real estate. It also expects agricultural activity to recover, although growth in the industrial sector is projected to moderate as momentum in oil production and manufacturing weakens.
Despite the improved growth outlook, the bank said Nigeria’s per-capita gains remained low, while high poverty and persistent inflation continued to strain households. It said sustaining reforms, reducing inflation and redirecting increased revenues towards pro-growth spending would be important for improving development outcomes.
The lender projected Nigeria’s inflation rate to decline from 23.0 per cent in 2025 to 15.7 per cent in 2026 and further to 12.2 per cent by 2028. It said lower inflation would support household purchasing power and contribute to a gradual reduction in poverty.
The World Bank, however, warned that the outlook remained exposed to several downside risks, including tighter global financial conditions, conflict in the Middle East, insecurity, climate-related shocks and disruptions to oil production. It also identified election uncertainties as a risk to the country’s economic progress.
The lender said rising spending pressures ahead of the 2027 elections could weaken reform momentum and make it harder to maintain macroeconomic stability, particularly as households continue to face elevated living costs.
The concerns come as the Central Bank of Nigeria continues to focus on inflation and liquidity management. At its September 2026 meeting, the Monetary Policy Committee lowered the Monetary Policy Rate to 23 per cent from 26.5 per cent, while retaining the Cash Reserve Requirement for deposit money banks at 45 per cent.
The World Bank also highlighted infrastructure gaps, market distortions and constraints on non-oil exports as structural challenges that could limit productivity and economic diversification. It called for continued reforms, stronger revenue mobilisation and investment that can support more inclusive growth.
Beyond Nigeria, the World Bank raised its growth forecast for Sub-Saharan Africa to 4.3 per cent in 2026 from 4.1 per cent in 2025. However, it said regional growth remained insufficient to substantially reduce extreme poverty or create enough jobs for the region’s rapidly growing labour force.
The lender said investments in reliable electricity, affordable digital connectivity, digital skills, quality data and computing infrastructure would be necessary for African economies to benefit from artificial intelligence and other digital technologies. It said these foundations could help raise productivity, create more jobs and translate economic growth into better opportunities and higher living standards.