By Sakariyah, Ridwanullah
The world is changing its mind about Nigeria’s economy. Against all expectations, the Naira has stabilized, and the country’s credit outlook has received a critical upgrade from global agencies like S&P Global Ratings, validating the painful reforms of the past year. As of November 2025, the data is clear: inflation is retreating, and the currency is finally decoupling from oil prices, signaling a profound shift in monetary management. This positive trend, driven by decisive monetary and fiscal reforms, is creating a window for strategic investments, a development which Vanguard News acknowledged in early November 2025, noting that the economy has moved beyond “survival mode” into a phase of “structural transformation and accelerated growth.”
The most compelling evidence of economic improvement is the retreat in the annual headline inflation rate. Data from the National Bureau of Statistics (NBS) and Trading Economics confirmed that the overall inflation rate decreased to 16.05% in October 2025, down from 18.02% in September, marking a continuous decline and the lowest rate recorded since March 2022. This easing of prices is the result of several factors working together. Firstly, favorable base effects are at play, that is, current prices are being compared to the extremely high levels recorded in 2024, which naturally slows the year-on-year growth rate. Secondly, the Food Inflation component has sharply declined to 13.12% in October 2025, helped by the ongoing harvest season aiding supply chains. Finally, the tight monetary policy maintained by the Central Bank of Nigeria (CBN), with the Monetary Policy Rate (MPR) currently at 27.00%, is designed to limit money supply in the economy, in order to help anchor consumer prices and curb excess demand.
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Moving on, the Nigerian currency has also demonstrated a measure of stability in late 2025. This calm is a direct reflection of the CBN’s difficult reforms, particularly the liberalization of the Foreign Exchange (FX) market. The average official exchange rate stood around ₦1,454.45/$ in November 2025. More importantly, this stability appears to be decoupling the currency from oil price dynamics, a significant and positive structural development. This growing faith in Nigeria’s economic policy was validated on November 14, 2025, when S&P Global Ratings revised Nigeria’s sovereign credit outlook from “stable” to “positive,” while affirming its long- and short-term ratings at ‘B-/B’. The agency explicitly credited Nigeria’s commitment to FX policy liberalization and the removal of fuel subsidies as the basis for the positive revision, signaling to global investors that the economic reforms are starting to deliver benefits. This affirmation by a major rating agency is vital for attracting foreign direct investment, as it lowers perceived risk.
Furthermore, the country’s overall economic output has started expanding. The National Bureau of Statistics (NBS) reported that the Gross Domestic Product (GDP) grew by 4.23% (year-on-year) in real terms in the second quarter of 2025. This figure is a clear improvement over the 3.48% growth recorded in the second quarter of 2024 reflecting a strengthening of the non-oil sector, which grew by 3.64%, and a significant recovery in oil production, which saw a real GDP growth of 20.46% in the oil sector during that period. The major sectors contributing to this expansion include the construction sector, which grew at 5.27%, and the non-oil sector, which contributed 3.64% to real GDP growth in Q2 2025, according to the NBS.
Despite this progress, the economic reality for the majority of Nigerians remains acutely difficult. Even at 16.05%, inflation is exceptionally high, far above global and regional averages, which continually erodes the purchasing power of the average citizen. This is particularly concerning, given that a 2024 NBS report found that 63% of Nigerians were multidimensionally poor. The high cost of goods means that the economic growth seen in the GDP figures has not yet translated into tangible relief for the most vulnerable populations, highlighting a deep issue of wealth distribution and income disparity. The Core Inflation rate, which strips out volatile food and energy costs, also remains high at 18.7% in October 2025, indicating that structural price pressures are still embedded in the system.
Looking ahead, analysts project a challenging but improving future. The International Monetary Fund (IMF), in its July 2025 Article IV Consultation Report, projected that the consolidated fiscal deficit could reach 4.7% of GDP in 2025, significantly higher than the budgeted target. The IMF warned that the 2025 budget was based on “optimistic hydrocarbon revenue projections” and that budgeted capital expenditure is “likely to exceed implementation capacity.” This issue of persistent deficits and lower-than-expected oil revenue poses a substantial threat to long-term macroeconomic stability.
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Thus, the current stability achieved in late 2025 is nothing short of a critical test. It demands that the government maintains strict fiscal discipline, improves the execution of its capital budget and ensures that the positive economic trajectory is sustained through transparent policies. The most important takeaway from the S&P revision and the inflation moderation is that policy consistency works, but to secure long-term growth and lift the 63% of the population out of poverty, the government must effectively address the structural issues of insecurity, inadequate infrastructure, and institutional inefficiencies that continue to hinder the full realisation of Nigeria’s economic potential.
