M’East Crisis: Fitch Reviews Africa’s Growth Projection, Raises Nigeria’s Inflation to 15.5%

Increases GDP slightly on higher oil prices, external position

Forecasts Brent crude to average $78 in 2026, up from $70

Emmanuel Addeh in Abuja 

A prolonged Middle East crisis has begun to reshape macroeconomic expectations across Sub-Saharan Africa, with Fitch Solutions revising regional growth slightly downward while warning of rising inflationary pressures, particularly in Nigeria, where price growth is now projected to hit 15.5 per cent in 2026.

Fitch’s latest assessment trimmed Sub-Saharan Africa’s aggregate growth forecast to 4.2 per cent from 4.3 per cent, reflecting what it described as an “extend-to-end” US-Iran conflict scenario lasting through April, underscoring the region’s vulnerability to external shocks, especially through energy and trade channels.

For Nigeria, however, the outlook presented a more complex, almost paradoxical picture as Fitch marginally upgraded Nigeria’s Gross Domestic Product (GDP) growth forecast to 4.4 per cent from 4.3 per cent, citing higher global oil prices, which are expected to boost export earnings and strengthen fiscal revenues.

This reflected Nigeria’s structural dependence on crude oil, which accounts for the bulk of export receipts and a significant share of government income. In periods of elevated oil prices, the country typically enjoys improved external balances, stronger foreign exchange inflows, and enhanced fiscal space.

Fitch also pointed to a key shift in Nigeria’s economic structure, that is, reduced exposure to fuel import shocks. Unlike during the 2022 global energy crisis, when rising oil prices inflated Nigeria’s import bill, the ramp-up in domestic refining capacity, driven largely by the Dangote Refinery, it said, has altered the dynamics. 

With less reliance on imported petrol, Fitch, in the report tagged: “ Sub-Saharan Africa: Modest Growth Revisions as US-Iran Conflict Continues”, stated that higher crude prices now translate more directly into net gains for the economy.

However, according to Fitch, through its subsidiary, Fitch Solutions Company, BMI, this upside is significantly tempered by the inflationary consequences of the same price surge. The liberalisation of Nigeria’s downstream petroleum sector means domestic fuel prices, it argued , now adjust more quickly to global benchmarks. As a result, higher oil prices are feeding directly into transport costs, food prices, and overall inflation.

Fitch’s upward revision of inflation to 15.5 per cent from 12.3 per cent previously highlighted the scale of this pressure. The implication is that while the government may earn more, households are likely to feel poorer, as rising living costs erode disposable income and dampen consumption.

This tension exposes a long-standing structural imbalance in Nigeria’s economy: growth driven by external windfalls rather than broad-based domestic productivity. In practical terms, the modest increase in GDP does not necessarily translate into improved welfare, particularly if inflation outpaces income growth.

“We believe that under our ‘extend-to-end’ US–Iran war scenario, the impact on the Nigerian economy will broadly net out. As we have previously highlighted, higher global oil prices will generate both an export and fiscal windfall for Nigeria, given that crude oil accounts for most exports and around one-third of federal revenues. 

“Moreover, Nigeria is now significantly less dependent on imported fuel than in previous years, following the ramp-up of the Dangote refinery. As a result, fuel import costs will not offset the boost from crude exports, as happened during the 2022 energy price shock following Russia’s invasion of Ukraine. 

“Nonetheless, the economy will still be affected through the inflation channel. Petrol prices have been liberalised and have already risen sharply in line with higher global benchmarks. We now forecast inflation to average 15.5 per cent in 2026, up from 12.3 per cent prior to the conflict.

“ Given this, we maintain our real GDP growth forecast at 4.4 per cent (slightly up from 4.3 per cent pre-conflict), as upside from higher oil prices – such as stronger government consumption and increased capex in the oil sector – will be largely offset by pressure on private consumption,” the report added.

Across the wider region, the impact of the crisis, it stressed, is more uniformly negative. Oil-importing countries face rising import bills due to higher energy and fertiliser costs, placing pressure on current accounts and currencies.

 Fitch noted that economies such as Kenya and South Africa are particularly exposed to these external shocks, given their reliance on imports and relatively weaker external buffers.

Even so, the firm maintained that the overall impact on Sub-Saharan Africa will remain contained at least under its baseline assumption that the conflict de-escalates by the end of April. Oil prices are expected to ease thereafter, limiting the duration of inflationary pressures.

But the risks are clearly skewed to the downside, with prolonged or escalating conflict likely to push oil prices well above current projections, intensify inflation, weaken currencies, and trigger broader macroeconomic instability across the region.

“We have made modest downward revisions to our 2026 growth forecasts for key Sub‑Saharan African (SSA) economies – reflecting our shift to the ‘extend-to-end’ US-Iran war scenario – which has lowered the regional aggregate from 4.3 per cent to 4.2 per cent .

“At this stage, we still expect the spillover effects on SSA to be limited, consistent with our global view that oil prices will largely normalise beyond April and that inflationary pressures prove transitory.

“Larger West African economies such as Nigeria and Ghana are in any event less exposed to rising global energy costs, but key markets such as Kenya and South Africa remain exposed to balance‑of‑payments pressures. 

“We have now transitioned to our ‘extend-to-end’ US–Iran war scenario, under which the conflict persists for a further four weeks, through to end-April. While military hostilities will continue over this period, we still see a credible pathway towards a deal that ultimately brings the conflict to a close. Even so, oil supplies will remain severely disrupted in the interim, with the Strait of Hormuz effectively closed for the duration of the conflict.

“In this context, we expect oil prices to trade at elevated levels through April, before gradually unwinding as trade flows are restored. However, the wide dispersion of possible outcomes – even within this scenario – leads us to outline three distinct oil price paths. We have adopted the mid case as our baseline and now forecast Brent crude to average $78/bbl in 2026, up from $70/bbl previously,” it explained.

According to the report, pressure on trade balances is also likely to be compounded by some weakness regarding financial account flows, as rising investor risk aversion towards emerging markets weighs on portfolio investment.

“ That said, our core view remains that external pressures will remain broadly contained for now since the conflict will de-escalate by end-April,” Fitch stressed.