This year has seen Nigeria undergo an economic turnaround rare in at least a decade, with citizens beginning to feel the early effects of sweeping government reforms.
In his Independence Day address on October 1, 2025, President Bola Tinubu declared that “Nigeria has finally turned the corner,” stressing that “the worst is over.”
BusinessDay examines key macroeconomic data and ground realities to assess whether the country has indeed emerged from its 'shock therapy', a reform drive that fueled inflation and led to the worst cost-of-living crisis in a generation, while also rebuilding investor confidence and attracting much-needed foreign exchange (FX).
Also read: Five charts show Africa's best markets in 2025
Nigeria's deflation trend will continue in 2025
One of the biggest changes in the Nigerian economy for 2025 was the reduction of headline inflation to 14.45 percent in November for the eighth consecutive month, compared to about 34 percent in the same period last year.
A sustained deflationary trend led one of Africa's largest economies to exceed its budgeted inflation target for the first time in six years. Although officials have introduced sweeping changes to the calculation of the consumer price index (CPI), bringing the figure down by about 24 percent in January, the decline in prices has been largely driven by a decline in food inflation.
Food inflation, which had soared to more than 34 percent last year, declined similarly to 11 percent, even though food products on the market were still relatively expensive for ordinary Nigerians.
Experts say with continued government intervention to ensure food security and statistical base effect, inflation is expected to remain at a single-digit rate in the coming year.
Annual growth accelerates despite oil price volatility
Nigeria's economy expanded in the three quarters ending September 2025, with annual growth hitting 4.23 per cent in the second quarter (Q2), the fastest in almost five years. This is in contrast to 3.86 percent and 3.76 percent recorded in the third and fourth quarters of 2024.
The expansion was mainly driven by the rapidly growing non-oil sector, especially services, which accounted for about 50 percent of gross domestic product (GDP), and significant improvements in agriculture, real estate, and information and communications.
While the country began some statistical recalibration of its economy to reflect new realities at the beginning of the year, economists say key reforms in the oil and non-oil sectors are setting Africa's biggest oil producer up for sustained growth in the coming year, even as it targets a seven percent growth rate to meet its ambitious $1 trillion economy over the next five years.
The World Bank believes the economy will end at 4.2 percent by 2025, while expanding to 4.4 percent by 2027, supported by services, agriculture and non-oil industry, effectively shifting the country's growth potential away from oil, which is often prone to instability and geopolitical shocks.
Also read: Nigeria's December economy: Too much money, not enough markets
Naira maintains rare stability as forex reserves rise
Since September, the naira broke below the psychological level of 1500 per dollar, helped by strong oil export earnings and improved portfolio flows that boosted the country's external reserves.
The calm in the exchange rate market, with gains of around 10 per cent, is in contrast to the sharp fluctuations seen last year when the currency lost 41 per cent of its value. Economists believe that the Naira will retain the 1440/$-1500/$ band in the coming year as well.
FX reserves also increased significantly, reaching their highest level in six years at more than $45 billion compared to $40.8 billion the previous year.
Stock market ASI more than doubled in one year
The Nigerian stock market experienced one of its strongest performances in at least a decade, with the All Share Index rising to 184.69 by December 23, 2025, compared to closing at around 77 last year.
Despite losing more than $3 billion in November in its biggest one-day drop in 15 years, the market came back stronger with a nearly 50 percent year-to-date return.
The local exchange moved closer to a record N100 trillion valuation as the market capitalization reached N97.9 trillion. Managing Director of the Financial Derivatives Company, Bismarck Rewane, believes the stock market valuation will reach N262 trillion in 2026 on the anticipated listing of mega corporates including Dangote Refinery and the Nigerian National Petroleum Company (NNPC).
Debt pressure calls for caution
Nigeria's debt levels continued to rise, increasing fiscal pressures despite improvements in revenues.
Nigeria's total public debt rose to N152 trillion by mid-2025 due to exchange rate adjustments and fresh borrowing, although the debt-to-GDP ratio remained moderate at about 40 percent.
External debt servicing, which reached a record $4.7 billion in 2024, put pressure on the fiscal position, absorbing about nine percent of export receipts. With debt servicing projected to exceed N15 trillion in 2026 appropriations (about 50 percent of projected revenue), the country's fiscal space remains constrained.
