With the International Monetary Fund (IMF) upgrading Nigeria’s GDP prediction a few days ago to 3.9% for 2025 and 4.2% for 2026, there may be hope for the continent’s largest economy.
Three main factors contributed to the upgrade: increased oil output, improved investor confidence, and a more accommodative fiscal posture.
The IMF published its most recent World Economic Outlook on Tuesday, with the heading “Global Economy in Flux, Prospects Remain Dim,” which included the updated numbers.
A 0.5 percentage point rise above its prior prediction, the upgrade indicates fresh hope for the nation’s medium-term economic future.
Nigeria’s economy has long been characterized by volatility, including currency instability, inflation, shocks to the oil price, and a growing poverty gap.
Prior to the inauguration of President Bola Ahmed Tinubu, Nigeria’s inflation rate hit 22.41% in May 2023, with food inflation hitting 24.82%, the highest level in 20 years.
Nigeria’s currency rate system was fractured by 2023, which encouraged roundtripping and rent-seeking. In order to protect the naira, the CBN spent billions of dollars in limited reserves, but monetary policy confidence declined.
Although actual usable reserves were much lower because of forward contracts and currency swaps, gross external reserves were $34.96 billion in 2023, while the GDP of the nation was 2.74%.
Imports and the repatriation of investor capital were further limited by the backlog of unmet foreign exchange obligations.
Nigeria’s economy was practically bankrupt in terms of operations by May 2023. Due to the loss of fiscal sovereignty, the nation was mostly dependent on external loans, CBN overdrafts, and opaque subsidy finance to remain afloat.
Public confidence in institutions hit its lowest level in decades, inflation reduced real incomes, and exchange-rate manipulations fostered corruption.
However, 2025 appears to be taking a different turn as the IMF’s updated outlook attributes the recovery to a combination of economic diversification, monetary tightening, and fiscal austerity.
The core of these adjustments is a revised GDP, the first since 2014, which showed a more dynamic economic structure. The rise in power of industries like professional services, entertainment, and digital technology indicates a move away from reliance on oil.
The annual inflation rate in Nigeria decreased to 18.02% in September 2025, the lowest level since May 2022.
Nigeria’s external reserves also reached their greatest level in more than six years on Thursday, September 25, 2025, when they reached $42.225 billion, surpassing the $42 billion threshold.
Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has a deeper story behind the figures that focuses on resilience, reform, and his strategic vision.
Since taking office, he has become known as a reform architect who works quietly. He has led Nigeria through several daring policy changes and is renowned for his technocratic accuracy and astute business sense.
The administration has made enhancing revenue collection, streamlining public finances, and reducing waste a top priority when it comes to fiscal transparency. In close collaboration with the CBN, he has also assisted in tightening monetary policy to fight inflation and stabilize the naira.
Due to the administration’s changes, global investors are now more interested in Nigeria since they perceive it as a more stable and investable market.
So far, the signals are encouraging. Nigeria is readjusting; it is no longer only existing. And with Edun in charge, the nation’s economic narrative is being rewritten with direction, accuracy, and a fresh feeling of hope.
Additionally, leading economists in the nation have endorsed these encouraging indicators.
Bismarck Rewane, the CEO of Financial Derivatives Company (FDC) Limited, asserts that Nigeria’s economic recovery is genuine and long-lasting.
“Reality Check: Is Nigeria’s Economic Recovery Authentic?” was the subject of the paper Rewane presented at the breakfast session of the Lagos Business School (LBS). “Yes, it is.”
When growth recovers following a period of contraction or slump, he defined economic recovery as the stage of the economic cycle.
According to the economist, gains in important metrics like GDP growth, inflation stabilization, employment rate, and more consumer and business confidence are what define Nigeria’s present recovery.
The price of gasoline at the pump, which increased significantly after the loss of subsidies, has decreased from N985 per litre in September 2024 to N841 in October 2025, he said when comparing the most recent economic data with those from the previous year.
Following the liberalization of the foreign exchange (FX) market, he added, the FX rate, which was approximately N1,900 per dollar in February 2024, increased to N1,488 in October 2025.
“After economic downturns or contractions, Nigeria’s economy tends to stabilize slowly at the bottom,” Rewane stated.
“The recovery is interrupted in some cases, and it progressively returns to a path of long-term growth in others.”
The current recovery, according to Rewane, is “near dynamic equilibrium,” with stabilizing economic factors, growing consumer and investor confidence, and GDP growth hitting a four-year high of 4.2%.
With the difference between the official and parallel windows closing to N24, the economist claimed the FX rate mismatch has also changed.
“This recovery is different from previous recoveries. Growth is not the only thing at stake; some fundamentals are shifting, he stated.
Despite the positive statistics, there is a rising appeal for caution as Nigeria continues its ambitious program for economic change.
Despite the fact that recent policies were intended to promote long-term stability, they have caused widespread hardship throughout the nation, prompting Edun and his staff to strike a balance between budgetary restraint and social attention.
The Federal Government should address inflation, especially food inflation, to close the gap between the reforms and their effects on the populace, said Dr. Matthew Verghis, the World Bank’s Country Director in Nigeria, a few days ago.
In the World Bank’s most recent Nigeria Development Update (NDU) report, “From Policy to People: Bringing the Reforms Gains Home,” which was published in Abuja on Wednesday, Verghis pointed out that although the reforms had given many Nigerians more purchasing power, poverty was still a major problem.
The reduction of food inflation, which is caused by ingrained supply and market inefficiencies, requires structural reforms in addition to these monetary and fiscal policies.
In a similar vein, Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprise (CPPE), acknowledged that although the government has carried out ambitious reforms in the past two years, Nigerians have recently suffered as a result of these actions.
He suggested that in order to safeguard disadvantaged households and keep public support, these reforms’ momentum should be maintained by implementing targeted social protection programs, including as cash transfers, food security interventions, and job-creation activities.
In order to achieve greater economic diversification in the future, Nigeria should prioritize increasing value addition in solid minerals, manufacturing, and agriculture.
He stated that the government must improve fiscal responsibility and management, lower the cost of governance, and increase openness in order to fortify institutions and governance.
