‘Inflation worry, weak purchasing power undermining 4.1% growth outlook’
Rising food prices and weak household purchasing power would continue to pose significant threats to inclusive economic growth despite the country’s improved macroeconomic outlook, Cowry Asset Management Limited has said.
The investment firm said recent economic reforms are beginning to deliver positive results and strengthen investor confidence, but regretted that the benefits may not be immediately felt by many Nigerians unless inflationary pressures ease and economic growth translates into higher incomes and employment.
According to Cowry Asset Management Limited, Nigeria’s economy is gradually returning to a stronger growth path, supported by improving macroeconomic stability, increased policy credibility and stronger external balances.
However, it noted, sustaining the recovery would require continued fiscal consolidation, exchange rate stability and disciplined monetary policy, alongside structural reforms aimed at raising productivity, promoting local value addition, improving energy security and expanding the country’s participation in the global digital and technology economy.
The firm explained that while the medium-term outlook of the economy is becoming increasingly positive, the durability of the recovery would depend largely on the government’s ability to convert macroeconomic gains into broad-based economic opportunities that improve the welfare of households, stimulate private sector investment and create sustainable jobs.
Cowry Asset Management Limited said the latest July 2026 World Economic Outlook from the International Monetary Fund (IMF) reinforced the view that Nigeria’s ongoing economic reforms are beginning to yield measurable growth.
Despite the improved growth projections, the investment firm observed that the IMF cautioned that elevated food and energy prices would continue to erode household purchasing power, worsen poverty and deepen food insecurity, limiting the extent to which stronger economic growth would improve living standards.
The firm noted that economies with stronger participation in the artificial intelligence value chain are expected to record better economic performance, while many developing countries with limited technology exposure could continue to experience slower growth.
It added that growth prospects across regions remain uneven. While advanced economies are projected to record modest growth, emerging and developing economies are expected to slow temporarily before rebounding in 2027.
Sub-Saharan Africa is forecast to maintain a growth rate of 4.3 per cent, supported partly by reforms undertaken in major economies such as Nigeria, although the region continues to grapple with high food and energy costs, limited fiscal space and inadequate integration into the fast-growing global technology ecosystem.
Cowry Asset Management Limited further noted that global inflation is projected to increase from 4.1 per cent in 2025 to 4.7 per cent in 2026 before moderating to 3.9 per cent in 2027.
It further stated that higher food and energy prices remain the major drivers of inflation, while renewed geopolitical tensions in the Middle East pose a significant downside risk to the global economy through increased inflationary pressures, wider external imbalances and greater vulnerability for emerging and frontier markets, including Nigeria.
