2026: Reforms To Steady The Naira, But Election Spending May Test The Guardrails
By OBI DAVIES
NIGERIA is stepping into 2026 with improving macroeconomic signals that contrast sharply with the turbulence of the previous two years. Analysts at Coronation Group say the economy is showing cautious resilience, driven by sustained policy reforms, rising foreign exchange (FX) liquidity, and stronger capital flows — but warn that the gains remain exposed to pre-election fiscal pressures.
In 2025, global markets grappled with tariff threats, trade realignments, and geopolitical flashpoints, forcing companies to delay investments and unwind prior adjustments. Yet, the IMF revised 2025 global GDP growth upward to 3.2% from 3.0%, reflecting unexpected stability in advanced economies, easing energy costs, and cooling inflation. Central banks, including the US Federal Reserve, cut interest rates by 75 basis points, though cautiously, amid concerns that trade tensions could keep inflation sticky.
Against this uncertain global backdrop, Nigeria’s domestic indicators showed relative improvement. Real GDP growth rose to 3.98% in Q3 2025, supported by higher oil export volumes, stronger agricultural output, and sustained expansion in ICT and financial services. Inflation moderated significantly, declining from 24.48% year-on-year in January 2025 to 14.45% by November, aided by tighter policy alignment between the Federal Government and the CBN, as well as statistical rebasing.
The naira also reversed months of steep depreciation, appreciating by 6.33% to N1,446.74 per dollar by November 2025, after losing over 41% in 2024. Coronation analysts link this to deeper FX market transparency and improved liquidity following the Unified Market FX Framework and enhanced compliance monitoring. Foreign investors responded positively, injecting $10.95 billion in portfolio inflows between January and November 2025, while Nigeria’s $2.35 billion Eurobond issuance attracted a record-breaking order book.
However, Coronation Group projects that 2026 will be a year of “fragile stabilisation,” where political liquidity cycles could determine outcomes. In its base-case scenario, the firm expects steady oil production and continued reform transmission to anchor moderate growth and further inflation easing in the first half of 2026. The optimistic case foresees stronger FX inflows, faster disinflation, and a firmer naira. The pessimistic scenario, however, assumes policy slippage, lower oil output, or aggressive pre-election fiscal injections, which could reignite inflation and limit monetary flexibility.
While the direction is encouraging, analysts stress that policy discipline — especially around election-cycle spending — will determine whether 2026 becomes a consolidation year or another volatility trigger.
