Q2 economic outlook: Heightened political tension may pose risks to policy focus — CPPE warns

The Centre for The Promotion of Private Enterprise (CPPE) has warned that the evolving         tensions ahead of the 2027 elections may pose serious danger to policy focus and reform momentum.

The centre gave the warning in a statement by its Chief Executive Officer, Dr. Muda Yusuf, on Sunday.

Acknowledging some stable macroeconomic improvements, in its Q1 Economy Review, it cautioned that such improvements still continue to coexist with significant headwinds.

This, it attributed to pronounced  cost-of-living crisis, elevated energy costs, persistent insecurity and deep-seated structural rigidities, which, it added, has continued to constrain productivity and investment.

While expressing cautious optimism, as the economy transitions into the second quarter of 2026, the Centre argued that besides insecurity and heightened political activities ahead of 2027 elections, fiscal execution constraints could also have serious   implications for budget implementation, infrastructure delivery, and overall economic performance.

On the macroeconomic stability gains in Q1 2026, the centre identified the consolidation of macroeconomic stability, with inflation  on a downward trajectory, in the period under review.

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 “Headline inflation, which exceeded 24 percent in early 2025, moderated to 15.15 v in December 2025 and further eased to approximately 15.06 percent by February 2026,” it added.

The centre described this as reflecting the combined effects of tighter monetary conditions, improved exchange rate stability, and some easing in supply-side pressures.

CPPE also expressed concerns that despite the improvement in macroeconomic indicators, the real economy continues to face significant headwinds, with the most pressing being the high-cost environment.

According to the organisation, while food prices have shown some moderation, transportation and energy costs remain elevated, and, in consequence significantly eroding household purchasing power.

The Centre however warned the Central Bank of Nigeria (CBN) against going the path of further tightening monetary rate in response to prevailing geopolitical and inflationary pressures, adding that stance would be counterproductive, given the fragility of current growth dynamics.

“The present inflationary episode is largely cost-push in nature, driven by energy prices, exchange rate pass-through, and structural inefficiencies, rather than excess aggregate demand. Consequently, additional monetary tightening would have limited effectiveness in addressing the underlying drivers of inflation, while potentially exacerbating constraints on investment, credit expansion, and overall economic growth,” it warned.