MON APRIL 06 2026-theGBJournal| Nigeria’s economic outlook for the second quarter of 2026 reflects a mix of sustained macroeconomic momentum and mounting downside risks, according to the Centre for the Promotion of Private Enterprise (CPPE).
The think tank noted that while recent policy measures have supported a gradual easing of inflationary pressures, the disinflation trend remains fragile and vulnerable to external shocks.
A key concern is the ongoing Middle East conflict, which has triggered a sharp rise in global crude oil prices.
For Nigeria, this development presents a double-edged scenario. On one hand, higher oil prices are expected to boost export earnings, improve foreign exchange inflows, and strengthen government revenues—offering some fiscal relief and external sector stability.
On the other hand, the downside risks are immediate and significant. Elevated crude prices tend to transmit quickly into higher domestic fuel costs, driving up logistics, production, and operating expenses across the economy.
CPPE warned that this cost pass-through could derail the fragile disinflation process, reverse recent gains in price stability, erode real incomes, and intensify cost-of-living pressures for households and businesses.
However, the think-tank expects the exchange rate to remain relatively stable in Q2, supported by improved reserves and FX liquidity, but warns that the risks of volatility persist, particularly in the event of prolonged geopolitical tensions or shifts in investor sentiment.
For businesses and investors, the current environment calls for a strategic shift from expansion-driven models to resilience, efficiency, and risk management.
Cost containment should be a top priority, particularly through energy efficiency and logistics optimisation. There is also a compelling case for investment in alternative energy solutions, including solar and gas-powered systems, to reduce dependence on costly diesel and petrol.
Foreign exchange risk management is critical. Firms should deepen local sourcing strategies, promote backward integration, and carefully manage currency exposure.
Liquidity management remains essential. Businesses should maintain strong cash buffers and avoid excessive leverage in a still high-interest-rate environment.
Investors should adopt a selective approach, focusing on sectors with:
-Strong and inelastic demand
-Pricing power
-Export potential or FX earnings capacity
-Policy support and structural growth prospects
Close monitoring of the political environment is also imperative, given the likelihood of policy shifts as the election cycle intensifies.
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