CBN predicts 4.49% growth, 12.94% inflation ease in coming year
CBN
Central Bank of Nigeria(CBN) has projected a 4.49 per cent economic growth and inflation easing to an average of 12.94 per cent next year.
In its economic outlook yesterday, the CBN said the growth and inflation easing will be driven by stable forex markets and rising oil output.
The forecast signals cautious optimism after two years of sweeping reforms by President Bola Tinubu’s government, with the bank betting on structural changes in oil, tax and foreign exchange markets to sustain growth and disinflation.
In the outlook for next year, the apex bank projects stronger non-oil growth and sturdier external buffers even as fiscal deficits and external vulnerabilities linger.
It said: “The growth prospect in 2026 is positive on account of continued gains from broad-based structural reforms… and improved stability in the exchange rate,” the central bank report said. Easing monetary policy would “add impetus to growth following the anticipated reduction in the cost of lending.”
The CBN kept its key rate at 27 per cent in November’s year-ending meeting, opting to let inflation cool further, but trimmed the deposit rate – a vote of confidence in the economy.
The move surprised economists, who had forecast a 100 basis-point cut after September’s first rate reduction since 2020.
The bank expects headline inflation, which has averaged around 21.26 per cent this year, to plunge next year as easing food and fuel prices, coupled with forex stability, rein in cost pressures.
Inflation slowed for the eighth straight month in November to 14.45 per cent.
The outlook pegs oil, Nigeria’s key export, at $55 a barrel, an official rate near N1,400 per dollar, and oil output at around 1.50 million barrels per day. Fiscal spending is expected to stay expansionary, with a deficit of N12.14 trillion, or 3.01 per cent of GDP, funded largely through domestic borrowing, the report said.
The bank sees external reserves climbing to $51.04 billion and a $18.81 billion current account surplus, buoyed by stronger oil and non-oil exports plus remittances.
According to CBN Governor, Olayemi Cardoso, over the past 12 months, the country’s economy has transitioned from crisis management to laying the groundwork for a sustainable recovery.
“After nearly a decade in which real GDP growth averaged about two per cent, reforms have restored momentum and confidence in our broad macroeconomic environment. Our economy grew by 4.23 per cent in the second quarter of 2025, the strongest pace in four years, driven by improvements in telecommunications, financial services, and oil production,” he said.
“More importantly, in terms of long-term stability, inflation, while still high, has moderated consistently. From a peak of 34.6% in November 2024, it has more than halved to 16.05% in October 2025. This marks seven consecutive months of disinflation. Food inflation, the largest single component of the basket, fell to 13.12 per cent in October, down from 16.87 per cent in September and 21.87 per cent in August,” he said.
This significant, steady decline in inflation is restoring real purchasing power for households and businesses. It also demonstrates disciplined execution and Nigeria’s return to orthodox monetary policy.
“We continue with determination to bring inflation down further. The current double-digit rate cannot be acceptable. Price stability is the foundation of sustainable growth. Our transition to an inflation targeting framework is gaining traction. We have improved data analytics, strengthened communication, and ended monetary financing of fiscal deficits. These actions have strengthened monetary policy transmission and anchored expectations.
“Our models project continued disinflation in 2026, helped by stronger domestic production, improved FX liquidity, and more disciplined liquidity management. As inflation moderates and becomes firmly anchored, we will calibrate the policy rate in line with evolving data.
“Domestic and international observers alike have noted Nigeria’s “huge turnaround” in macroeconomic management. Our commitment remains clear: monetary policy will stay evidence-based, data-driven, and unwavering in its pursuit of price stability.”
