LAGOS — Nigeria's economy is expected to remain on a gradual recovery path during the second half of 2026, according to an outlook by the Centre for the Promotion of Private Enterprise. The organisation said improvements in financial services, telecommunications, construction, trade and oil refining could support economic activity during the period. The projection comes as Nigeria enters the second half of the year with some signs of improved macroeconomic stability. Exchange-rate conditions have become more stable compared with earlier periods, while inflation has shown signs of moderation and crude-oil production has improved. However, the economic recovery has not yet translated into stronger living standards for many households and businesses. High operating costs continue to affect companies, while consumers remain concerned about food prices and household expenses. The CPPE therefore described the recovery as gradual and fragile. One of the major risks identified by the organisation is the increasing political activity ahead of the 2027 general elections. Election-related spending can increase demand in some sectors, but excessive political uncertainty can also distract policymakers from economic reforms. Businesses and investors require a predictable policy environment to make long-term decisions. Continued implementation of economic reforms will therefore be important. Nigeria has undertaken major policy changes in recent years, including reforms affecting the foreign-exchange market, fuel subsidies and public finances. These measures have generated significant short-term pressure but are intended to improve the structure of the economy. The effectiveness of the reforms will depend partly on whether they produce stronger investment, productivity and employment. Oil remains an important source of government revenue and foreign exchange. Improved production could strengthen public finances and external reserves, but the economy remains vulnerable to changes in global oil prices. Diversifying sources of growth is therefore essential. The financial-services sector is one area that has shown resilience. Banks and other financial institutions support economic activity by providing credit, payment services and investment channels. However, high interest rates can make borrowing difficult for businesses, particularly small and medium-sized enterprises. Telecommunications is another major sector. Nigeria's large digital market continues to support investment in mobile communications, internet services and digital businesses. Expansion of digital infrastructure can improve productivity across other sectors as well. Construction and trade are also expected to contribute to growth, although businesses in these sectors face high input and logistics costs. Manufacturing remains particularly sensitive to electricity costs, foreign exchange and access to imported raw materials. Lower inflation and greater exchange-rate stability could gradually improve business planning if the trend is sustained. Agriculture remains crucial to food security and employment. However, insecurity, flooding and infrastructure problems continue to affect farmers in some areas. Investment in irrigation, storage, transportation and agricultural processing could help reduce losses and increase productivity. The government will also need to maintain attention on food inflation because improvements in headline economic indicators have limited meaning for households if food remains unaffordable. Job creation is another major challenge. Nigeria's rapidly growing population requires the economy to generate large numbers of productive jobs each year. Growth in sectors such as construction, technology, agriculture and manufacturing could help, but businesses need a supportive operating environment. Stable electricity, reliable transportation, access to finance and clear regulations are important for investment. The CPPE's outlook therefore points to an economy with opportunities but significant risks. Policymakers will need to maintain reform momentum while addressing the social costs of adjustment. Social protection programmes can help vulnerable households cope with economic pressures while longer-term reforms take effect. For businesses and investors, the second half of 2026 will provide an important test of whether Nigeria's recent macroeconomic improvements can develop into sustained growth. Political developments will also influence expectations as parties prepare for the 2027 elections. Maintaining policy consistency and economic stability could strengthen investor confidence. For ordinary Nigerians, however, the most important measure of recovery will be whether prices become more manageable, incomes improve and employment opportunities expand. The economic outlook therefore remains cautiously optimistic but dependent on effective policy implementation.