FG may adjust policies as Middle East crisis threatens Nigeria’s economic outlook

The Federal Government has indicated it may recalibrate economic policies if the escalating geopolitical tensions in the Middle East begin to transmit shocks to Nigeria’s economy through energy markets, capital flows, and global supply chains.

In a statement released on Tuesday by the Federal Ministry of Finance, authorities said they were closely tracking the evolving crisis involving the United States, Israel and Iran, noting that the situation could introduce fresh volatility into global commodity and financial markets.

The statement was signed by the Assistant Director of Information and Public Relations at the ministry, Mrs Uloma Amadi.

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**What the statement says **

• _“The Federal Government will continue to monitor the situation closely and adjust policy measures where necessary to minimise disruptions, sustain investor confidence, and protect the welfare of Nigerians,” the statement read. _

According to the ministry, the Economic Management Team, chaired by the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, has already begun evaluating the possible implications of the crisis for Nigeria’s fiscal and macroeconomic outlook.

Edun also presided over a Naira-for-Crude policy coordination meeting where officials assessed developments in global energy markets and the potential spillovers for domestic energy pricing and supply.

• _“The Federal Government of Nigeria is closely monitoring escalating geopolitical tensions in the Middle East involving the United States, Israel, and Iran, and remains committed to safeguarding Nigeria’s economic stability,” the statement noted. _

**Energy, capital flows and supply chains flagged as risks **

Officials at the EMT session identified three major channels through which the crisis could transmit economic pressure to Nigeria.

The first relates to energy markets. The ministry explained that rising volatility in crude oil and gas prices could translate into higher domestic costs for petroleum products and other energy-linked inputs.

• _“Volatility in global energy markets is already driving increases in domestic prices, including fuel, diesel, cooking gas, and fertiliser,” the statement said. _

The second channel involves financial markets and cross-border capital flows. Heightened geopolitical risk often pushes global investors towards safe-haven assets, a shift that could reduce capital inflows into emerging economies.

The third transmission pathway relates to global logistics and supply chains. According to the ministry, disruptions to key shipping lanes or energy corridors could push up freight costs and feed into domestic inflationary pressures.

• _“Disruptions to major shipping and energy supply routes could raise international freight and logistics costs, putting upward pressure on domestic prices,” the statement added. _

The ministry warned that if the instability in the region becomes prolonged, the knock-on effects could extend beyond energy prices and logistics to broader inflationary pressures.

• _“The Honourable Minister noted that beyond these immediate effects, sustained instability could drive increases in the cost of goods and services, placing further upward pressure on inflation and the cost of living,” the statement said. _

During the EMT meeting, ministers responsible for key economic sectors presented assessments of how global market movements could influence Nigeria’s fiscal balance, exchange rate stability and external reserves.

The ministry explained that the scale of the impact would depend largely on how long the geopolitical tensions persist and whether global oil supply routes are materially disrupted.

**The government tracks macroeconomic indicators **

To manage potential spillovers, the government said the EMT has begun tracking a set of macroeconomic indicators that could signal early pressure on the domestic economy.

These include movements in global crude oil prices and supply conditions, exchange rate developments, and the possible pass-through effects on domestic inflation.

• Officials are also reviewing trends in capital flows, financial market conditions, and their implications for Nigeria’s fiscal outlook and external reserves.
• Despite the rising uncertainty, the government maintained that Nigeria entered the current period of global volatility with relatively stronger macroeconomic fundamentals.
• It cited recent data showing that the economy recorded real Gross Domestic Product growth of 4.07 per cent in the fourth quarter of 2025, describing the performance as one of the strongest quarterly expansions in more than a decade.
• The ministry attributed the improvement to ongoing structural reforms and tighter coordination between fiscal, monetary and energy policies.

Authorities added that the government intends to safeguard these gains by maintaining close collaboration across key economic institutions while reviewing policy options to cushion households and businesses from global shocks.

Edun stressed that careful policy calibration would remain central to the government’s response, particularly as policymakers attempt to prevent external disruptions from undermining recent progress in macroeconomic stability, revenue mobilisation and economic growth.

The statement added that the Federal Government said it remained vigilant and proactive, stressing that authorities would take all necessary steps to safeguard Nigeria’s economic stability and sustain the country’s growth trajectory.