By Bankole Orimisan
CARDINALSTONE Research has lowered its 2026 economic growth forecast for Nigeria to 4.2 per cent from an earlier projection, citing the impact of heightened global geopolitical tensions, weaker productivity and mounting election-related risks, even as it projected that interest rate cuts may only resume after the 2027 general elections.
The investment research firm said although Nigeria’s macroeconomic fundamentals remain resilient, the country’s growth outlook has been moderated by renewed global uncertainties, including the escalation of tensions in the Middle East, which have disrupted global trade, heightened inflationary pressures and weakened investor sentiment.
In its 2026 Mid-Year Asset Allocation Guide titled Defying the Odds, CardinalStone projected that Nigeria’s Gross Domestic Product (GDP) would expand by 4.2 per cent this year, compared with an estimated 3.8 per cent in 2025, supported by continued gains from foreign exchange reforms, improving macroeconomic stability and stronger domestic demand.
The report, however, noted that the Central Bank of Nigeria (CBN) is likely to maintain a cautious monetary policy stance for the remainder of 2026 as concerns over increased government borrowing and election-related fiscal spending continue to weigh on inflation expectations and financial market stability.
According to the firm, meaningful reductions in interest rates are more likely to occur after the 2027 elections, when political uncertainties are expected to subside and inflation moderates further.
CardinalStone projected average inflation at 15.9 per cent in 2026, down from 23.3 per cent recorded in the previous year, while noting that Nigeria’s sustained current account surplus and foreign exchange reforms would continue to support exchange rate stability despite external shocks.
The research house advised investors to adopt a defensive investment strategy amid lingering global uncertainties, recommending a higher allocation to domestic assets, which it said continue to benefit from structural reforms and improving macroeconomic conditions.
It recommended allocating about 70 per cent of investment portfolios to domestic assets and 30 per cent to quality foreign assets to balance risk and returns in the current environment.
Industry analysts said the revised growth outlook reflects the growing influence of global developments on Nigeria’s economic performance despite improvements recorded under recent fiscal and monetary reforms.
They noted that while moderating inflation, exchange rate stability and higher oil production could support economic expansion, elevated borrowing costs remain a major constraint to private sector investment, manufacturing output and credit growth.
The analysts added that postponing interest rate cuts until after the 2027 elections could prolong tight financing conditions for businesses, although it may help preserve macroeconomic stability and sustain investor confidence during the election cycle.
The revised projection comes as international financial institutions maintain broadly positive outlooks for Nigeria’s economy, albeit with varying growth estimates. While the International Monetary Fund has highlighted the gains from recent structural reforms, it cautioned that global uncertainties, inflation risks and fiscal pressures remain key downside risks to the country’s medium-term growth prospects.
