2027 polls: Pre-election spending, rising enterprise prices might derail {economic} positive factors, CBN warns

• • Says ‘unanticipated fiscal growth might
    constrain personal sector exercise, gradual progress’

The Central {Bank} of Nigeria has cautioned that rising pre-election spending and growing enterprise prices might pose vital dangers to the nation’s {economic} outlook in 2026.

Whereas reforms within the {financial} and actual sectors have strengthened macroeconomic fundamentals, the apex {bank} highlighted, in its {economic} outlook for 2026, that reaching projected progress and disinflation would rely on managing a number of rising vulnerabilities.

Within the doc obtained by THE POINT, the CBN mentioned headline inflation was projected to reasonable to a median of 12.94 per cent in 2026, pushed by declining meals and petroleum costs.

Nevertheless, it warned that higher-than-expected pre-election spending and extra-budgetary outlays may push costs upward, probably forcing the financial authorities to regulate coverage measures.

“Unanticipated fiscal growth may reverse the anticipated deceleration in inflation, constrain personal sector exercise, and gradual progress,” the {Bank} famous.

The CBN highlighted that persistent structural challenges —equivalent to excessive vitality prices, poor infrastructure, insecurity, and elevated enterprise working bills — remained a threat to productiveness.

Corporations going through elevated operational prices might implement layoffs or scale back investments, which may slender the formal sector and restrict the optimistic results of ongoing reforms.

Geopolitical tensions, protectionist commerce insurance policies, and volatility in world commodity markets may exacerbate home inflation, the apex {bank} famous.

The CBN added that disruptions in world provide chains would possibly improve enter prices, particularly for import-dependent industries, additional straining the economic system throughout a interval of fiscal growth.

It mentioned hostile climate and climate-related shocks remained a essential danger to the true sector, warning that detrimental agricultural shocks may destroy crops, disrupt meals provide chains, and improve meals costs—jeopardising the projected moderation in inflation and impacting general {economic} progress.

The {Bank} emphasised that unanticipated disruptions to crude oil production, whether or not from safety incidents or operational challenges, may constrain output and monetary income, affecting public funding and macroeconomic stability.

Rising enterprise prices and insecurity in oil-producing areas may additionally dampen projected progress in 2026, it noticed.

Regardless of these dangers, the CBN stays optimistic that the continuing reforms within the {financial} and actual sectors will assist resilience.

“THE OUTLOOK IS CAUTIOUSLY OPTIMISTIC, BUT VIGILANCE IS REQUIRED.ENSURING THAT FISCAL AND MONETARY POLICIES REMAIN ALIGNED AND FORWARD-LOOKING IS ESSENTIAL TO SUSTAINING NIGERIA’S ECONOMIC GAINS IN 2026.”

Measures to stabilise the overseas change market, increase home refining capability, and improve income assortment are anticipated to strengthen personal sector-led progress, in response to the {Bank}.

The CBN additionally cited ongoing reforms in financial coverage, banking sector recapitalisation, and {financial} inclusion as key enablers for sustaining progress and investor confidence.

The apex {bank} emphasised that shut coordination between fiscal and financial authorities was essential to sustaining {economic} momentum.

Based on the CBN report, disciplined fiscal administration, notably within the lead-up to elections, can be important to keep away from triggering inflationary pressures that might undermine progress.

The CBN reiterated its dedication to balancing worth stability with assist for output progress in 2026.

Whereas Nigeria’s economic system is projected to develop at 4.49 per cent in 2026, the CBN cautioned that pre-election spending, excessive enterprise prices, and exterior vulnerabilities have been essentially the most vital draw back dangers.

Based on the {Bank}, failure to handle these dangers may disrupt the anticipated trajectory of disinflation, gradual personal sector growth, and constrain general macroeconomic efficiency.

“The outlook is cautiously optimistic, however vigilance is required. Guaranteeing that fiscal and financial insurance policies stay aligned and forward-looking is important to sustaining Nigeria’s {economic} positive factors in 2026,” the CBN acknowledged.