Yemisi Izuora
The Center for the Promotion of Private Enterprise (CPPE) has published its findings after reviewing Nigeria’s Q1, economic performance.
The latest report as analyzed by the Chief Executive Officer (CEO) of the Center Dr. Muda Yusuf, showed that the Nigerian economy in the first quarter of 2026 reflected a blend of improving macroeconomic stability and persistent structural constraints.
Evidence of a more stable macroeconomic environment is increasingly evident, underpinned by the cumulative gains from foreign exchange reforms, a sustained period of monetary tightening, and the gradual normalization of key economic indicators.
However, Yusuf, noted that these improvements continue to coexist with significant headwinds. The cost-of-living crisis remains pronounced, energy costs are still elevated, concerns around insecurity persist, and deep-seated structural rigidities continue to constrain productivity and investment.
As the economy transitions into the second quarter of 2026, the outlook is cautiously optimistic but not without considerable risks.
According to the CPPE Chief, The trajectory of macroeconomic stability is vulnerable to external shocks—particularly evolving geopolitical tensions—while the intensifying political cycle ahead of the 2027 elections could pose risks to policy focus and reform momentum. Additionally, fiscal execution constraints remain a critical concern, with implications for budget implementation, infrastructure delivery, and overall economic performance.
Giving more details, he observed that the most notable development in Q1 2026 was the consolidation of macroeconomic stability.
“Inflation continued on a downward trajectory. Headline inflation, which exceeded 24 per cent in early 2025, moderated to 15.15 per cent in December 2025 and further eased to approximately 15.06 per cent by February 2026. This reflects the combined effects of tighter monetary conditions, improved exchange rate stability, and some easing in supply-side pressures.”
He also noted that exchange rate conditions also improved significantly as the naira, which experienced substantial volatility during the reform transition period, stabilised within a relatively narrow band of about ₦1,340–₦1,430 per dollar in the official market during Q1 2026. This stability has helped to moderate imported inflation and restore a measure of business confidence.
“External reserves strengthened considerably, rising above $50 billion in early 2026. “This improvement reflects stronger oil earnings, enhanced foreign exchange liquidity, and improved market confidence, thereby strengthening the capacity of monetary authorities to manage exchange rate volatility.
“Growth momentum remained positive. Real GDP growth stood at 4.07 per cent year-on-year in Q4 2025, with full-year growth at 3.87 per cent, supported by recovery in the oil sector and sustained expansion in the non-oil economy. Business activity indicators also remained positive, with Purchasing Managers’ Index (PMI) readings consistently above the 50-point expansion threshold.
“Monetary policy has begun to reflect these improvements. In February 2026, the Monetary Policy Committee reduced the policy rate by 50 basis points to 26.5 per cent, signaling the start of a cautious easing cycle.
“Overall, these developments point to a transition towards relative macroeconomic stability—an essential foundation for restoring investor confidence and improving economic growth outlook.” he reported.
Yusuf, however pointed out that despite the improvement in macroeconomic indicators, the real economy continues to face significant headwinds.
“The most pressing challenge remains the high-cost environment. Although food prices have shown some moderation, transportation and energy costs remain elevated, significantly eroding household purchasing power. The welfare impact of earlier reforms—particularly fuel subsidy removal and exchange rate liberalisation—continues to weigh on citizens.” he added.