Nigeria’s economy recorded measurable improvements in macroeconomic stability during the first quarter of 2026, according to the Centre for the Promotion of Private Enterprise (CPPE).
In its latest economic review, CPPE Founder, Dr Muda Yusuf, said recent policy reforms and improved foreign exchange management contributed to stabilising key economic indicators.
He noted that tighter monetary policies, alongside ongoing foreign exchange reforms, helped restore confidence in the economy during the period.
Despite these gains, Yusuf cautioned that several structural challenges continue to limit economic performance, including high operating costs, insecurity, and weak consumer demand.
According to the report, inflation showed a steady decline, dropping from over 24 percent in early 2025 to approximately 15.06 percent by February 2026.
The naira exchange rate also remained relatively stable, trading between N1,340 and N1,430 per dollar in the official market, easing pressure on imported goods.
External reserves improved significantly, rising above $50 billion supported by stronger crude oil earnings and increased forex liquidity.
Yusuf added that economic growth remained positive, with Nigeria’s Gross Domestic Product (GDP) expanding by 4.07 percent year-on-year in Q4 2025 and 3.87 percent for the full year
Business activity indicators also showed resilience, with the Purchasing Managers’ Index (PMI) consistently above the 50-point benchmark, indicating expansion.
The improving outlook prompted the Monetary Policy Committee (MPC) to reduce the benchmark interest rate by 50 basis points to 26.5 percent in February 2026.
Persistent Economic Challenges
Despite macroeconomic gains, Yusuf said the real sector continues to face significant pressures.
He pointed to high energy and transportation costs as major factors driving the cost-of-living crisis, which continues to erode household purchasing power.
Businesses, he noted, are struggling with unreliable electricity supply, forcing them to rely on expensive alternatives such as diesel and gas.
Insecurity remains another critical concern, particularly in rural areas, where it disrupts agricultural activities and affects food production.
Yusuf also highlighted limited access to credit, especially for small and medium enterprises, due to high lending rates.
He said declining real incomes and rising costs are weakening consumer demand across sectors.
Outlook for Q2 2026
Looking ahead, Yusuf expressed cautious optimism about the economic outlook but warned of potential risks.
He identified the ongoing Middle East conflict as a major external factor, noting that rising crude oil prices — now above $100 per barrel— could create inflationary pressures.
While higher oil prices may boost government revenue and foreign exchange inflows, he warned that they could also increase fuel costs and disrupt the fragile stability achieved so far.
This, he said, could lead to rising inflation and further strain on businesses and households.
Policy and Investment Recommendations
Yusuf urged policymakers to sustain reform efforts, improve fiscal discipline, and address structural bottlenecks affecting productivity.
He called for targeted interventions to protect vulnerable populations from rising living costs.
For businesses and investors, he recommended focusing on resilience strategies, including cost management, local sourcing, and investment in alternative energy solutions.
He also advised investors to prioritise sectors with strong demand, export potential, and favourable government policies.
Yusuf added that political developments ahead of the 2027 general elections would also influence investor confidence and economic direction.
