Nigeria’s economic growth could accelerate to 4.2 per cent in the second half of 2026, as improving oil production, greater foreign exchange liquidity and stronger activity in non-oil sectors support the economy, according to a new analysis attributed to PwC.

The projection was contained in PwC’s latest macroeconomic report, “Unlocking Nigeria’s Reform Dividend: From Macroeconomic Stabilisation to Inclusive Growth.”

The outlook suggests that the economy could build on the recovery recorded earlier in the year, although persistent inflation, high energy and transportation costs and fiscal pressures remain significant risks.

According to the report, the recovery in Nigeria’s oil production is expected to remain one of the major drivers of economic activity.

Crude oil output reportedly reached about 1.56 million barrels per day around mid-year, strengthening government revenue and foreign exchange inflows.

Improved liquidity in the official foreign exchange market has also helped reduce some of the uncertainty faced by manufacturers and other businesses that depend on imported inputs.

The report further pointed to continued activity in services, extractive industries and digital commerce as additional contributors to economic expansion.

Despite the more positive growth outlook, PwC warned that stronger headline GDP figures may not immediately translate into improved living standards for millions of Nigerians.

Rising costs of energy, food, transportation and logistics continue to put pressure on households and businesses.

Higher fuel and freight costs, in particular, could feed into prices across the economy, potentially weakening consumers’ purchasing power even as overall economic activity improves.

The report noted that higher crude prices could strengthen Nigeria’s oil revenues and foreign exchange position if increased production is sustained and fiscal leakages are controlled. However, rising costs of refined petroleum products, freight, fertiliser and transportation could also contribute to imported inflation.

Nigeria’s improving revenue position is another important part of the economic outlook.

Federation Account Allocation Committee (FAAC) distributions have increased significantly, providing additional resources to federal, state and local governments.

However, rising revenues continue to face pressure from the government’s debt-servicing obligations and other fiscal commitments.

The combination of increased revenue and elevated expenditure obligations means that authorities will need to maintain fiscal discipline if the current macroeconomic improvements are to be sustained.

PwC urged policymakers to focus on reforms capable of turning economic stabilisation into broader and more inclusive growth.

Among the priorities highlighted are faster execution of public investment projects, reducing overlapping regulatory requirements and improving domestic gas supply for industrial and electricity generation.

The firm also stressed the importance of improving security around critical oil-producing and pipeline corridors to protect recent gains in crude production.

While the 4.2 per cent H2 growth projection points to strengthening economic activity, the report underscores that the bigger challenge for Nigeria remains translating macroeconomic improvements into higher incomes, more jobs and meaningful relief from the cost-of-living pressures facing households.

Recent economic commentary has similarly pointed to reform-driven stabilisation, improved oil production and foreign-exchange reforms as important supports for Nigeria’s 2026 growth outlook.