…Nigerian economy to grow by 3.86% in Q1
Nigeria’s private sector returned to expansion in February, as improved exchange rate stability helped ease inflationary pressures to a six-year low and supported stronger business activity, according to the latest Purchasing Managers’ Index (PMI) survey.
The headline PMI rose to 53.2 in February from 49.7 in January, signalling a renewed improvement in business conditions and marking the highest in two months.
“After the dip seen in January, the Nigerian private sector returned to growth, with the headline PMI settling higher at 53.2 points in February from 49.7 in January,” said Muyiwa Oni, head of equity research for West Africa at Stanbic IBTC Bank.
The rebound was driven by a recovery in customer demand, which led to a sharp rise in new orders and a faster increase in output across all four sectors covered by the survey.
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“Output (55.8 vs January: 50.2) regained momentum in February, while new orders (55.5 vs January: 49.9) also increased in the month,” Oni said, noting that the wholesale and retail segment returned to growth after contracting in January.
Exchange rate stability played a central role in moderating cost pressures.
Data published by the Central Bank of Nigeria showed that the local currency weakened by 4.68 per cent in two months, with the dollar quoted at N1,363 on February 27 compared to N1,430 on January at the Nigerian Foreign Exchange Market (NFEM).
“Local currency appreciation helped to support softer input and output prices in February, as the naira has been trading below 1400 against the dollar consistently since 29 January,” he said.
The stronger currency slowed the pace of purchase cost inflation to its weakest level in more than six years, while output price inflation eased to its lowest rate since January 2020. Firms, however, still reported higher staff costs due to cost-of-living adjustments and rising prices for some raw materials, including animal feed.
The report disclosed that with new orders increasing, companies raised employment for the ninth consecutive month, recording the fastest pace of job creation since October 2025. Businesses also expanded purchasing activity and built up inventories to meet higher demand.
Despite the sustained hiring, backlogs of work increased at the fastest pace since May 2020, as firms cited delayed client payments, shortages of staff and materials, and persistent power supply issues.
Supplier performance improved during the month, with delivery times shortening amid prompt payments and better traffic conditions.
Beyond the near-term recovery, the outlook for the economy remains positive.
“The Nigerian economy is on track to grow by 3.86 percent year-on-year in Q1 2026, and we still see real GDP growth at 4.1 percent year-on-year in 2026,” Oni said.
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He added that infrastructure spending, investment in oil and gas and manufacturing, easing trade constraints and the forward linkages from the Dangote refinery are expected to support growth, while lower inflation and interest rates could boost private consumption and business investment.
“Because of these factors, we see more sectors contributing to the real GDP growth rate in 2026 compared to 2025,” he said, noting that this could translate into improved living conditions after the impact of recent economic reforms
Chinwe Michael
Chinwe Michael is a financial inclusion advocate and economy journalist who uses compelling storytelling to drive awareness. With a background in Banking and Finance and experience across accounting, media, and education, she applies sharp analysis and attention to detail to every piece. She simplifies complex financial and economy concepts into engaging content for Africa and global audience. Chinwe also doubles as a speaker with global recognition for her expertise.
