By Seun Ibiyemi
Nigeria’s economy showed encouraging signs of recovery in the first quarter of 2026, with improved macroeconomic stability, although rising costs and external uncertainties continue to pose significant risks.
According to a policy brief by the MD/CEO Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, inflation declined steadily, dropping to about 15.06 percent by February 2026 from over 24 percent recorded in early 2025.
The decline reflects the impact of tight monetary policies, exchange rate stability, and easing supply constraints.
The naira also recorded relative stability during the quarter, trading between ₦1,340 and ₦1,430 per dollar in the official market.
This was supported by stronger external reserves, which rose above $50 billion, improving investor confidence and foreign exchange liquidity.
Growth remained positive, driven by improvements in both the oil and non-oil sectors. The country recorded a 4.07 percent year-on-year GDP growth in the final quarter of 2025, with business activity indicators suggesting continued expansion.
However, the report noted that these macroeconomic gains have yet to translate into relief for many Nigerians. High energy and transportation costs, weak consumer demand, and ongoing insecurity continue to strain households and businesses.
Businesses, in particular, face rising operational costs due to heavy reliance on alternative energy sources such as diesel and petrol, as power supply challenges persist.
Looking ahead to the second quarter, the CPPE warned that the outlook remains uncertain despite the progress recorded.
Escalating geopolitical tensions in the Middle East have driven global oil prices above $100 per barrel, raising concerns about renewed inflationary pressures.
While higher oil prices could boost government revenues and foreign exchange earnings, they are also expected to increase domestic fuel costs, further driving up production and transportation expenses.
The report also highlighted risks of exchange rate volatility, slowing growth momentum, and a possible stagflation scenario if inflation rises while growth weakens.
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Additionally, growing political activities ahead of the 2027 general elections may shift focus away from economic reforms, while challenges in budget implementation could limit the impact of fiscal policy.
The CPPE advised businesses to adopt cost-saving measures, invest in alternative energy, and strengthen financial resilience to navigate the uncertain economic environment.
It concluded that sustaining the current recovery will require careful management of both domestic and external risks, alongside continued commitment to structural reforms.
