CBN outlook signals steady economic gains amid global headwinds

The Central Bank of Nigeria (CBN) has released its 2025 macroeconomic outlook, presenting a cautiously optimistic assessment of the country’s economic performance against a backdrop of global uncertainty. The report notes that global economic growth slowed marginally to 3.2 per cent in 2025 from 3.3 per cent in 2024, largely due to lingering trade tensions and weak demand in major economies.

At the same time, global inflation eased to 4.2 per cent, driven by lower energy prices and the gradual normalisation of supply chains. These global developments shaped Nigeria’s policy environment and influenced domestic economic outcomes during the year.

Despite external pressures, Nigeria recorded stronger growth in 2025, with real GDP expanding by 3.89 per cent, compared with 3.38 per cent in 2024. The CBN attributed this performance to improvements across both oil and non-oil sectors, particularly agricultural reforms, increased crude oil output and sustained expansion in the services sector.

Inflationary pressures moderated over the year, falling from 24.48 per cent in January 2025 to an average of 21.26 per cent by year-end. The moderation was linked to the CBN’s tight monetary policy, improved exchange rate stability and closer coordination between fiscal and monetary authorities, highlighting the impact of targeted policy interventions.

In the financial sector, growth in monetary aggregates slowed as higher interest rates tightened liquidity conditions. Nonetheless, the banking system remained stable, with key indicators staying within regulatory thresholds, reflecting effective supervision and sound risk management.

Fiscal conditions also improved, supported by ongoing reforms and relatively stable crude oil prices. The fiscal deficit narrowed, while public debt stood at 33.98 per cent of GDP by mid-2025, a level the CBN described as manageable. These developments point to stronger revenue mobilisation and improved discipline in public finance management.

On the external front, Nigeria posted a balance of payments surplus of $5.8 billion in 2025, bolstered by rising external reserves. This strengthened the country’s external buffers and enhanced investor confidence at a time of heightened global volatility.

Looking ahead, the CBN projects economic growth of 4.49 per cent in 2026, anchored on the continued implementation of structural reforms and a gradual easing of monetary policy as inflation declines. Headline inflation is forecast to drop significantly to an average of 12.94 per cent, supported by lower food prices and easing premium motor spirit (PMS) costs. If realised, these projections could mark a turning point toward greater macroeconomic stability and more inclusive growth.

However, the outlook is not without risks. The CBN cautioned that inflation remains vulnerable to unexpected shocks, including supply disruptions and global commodity price spikes. Fiscal slippages could also exert pressure on the exchange rate and reignite inflation, while shifts in global financial conditions may trigger capital outflows.

Other risks identified include adverse weather conditions and potential disruptions to oil production, both of which could weigh on output growth. The bank stressed that sustained vigilance and policy flexibility would be essential in managing these uncertainties.

To sustain the gains recorded so far, the CBN urged a balanced monetary policy approach that supports growth while maintaining price stability. It also called on fiscal authorities to broaden the tax base, improve tax efficiency and enforce spending discipline to ensure long-term fiscal sustainability.

In addition, the bank emphasised the need to safeguard financial sector stability, including strengthening the implementation of the Global Standing Instruction (GSI) framework, to mitigate emerging risks and reinforce confidence in the banking system.

Overall, the CBN’s 2025 outlook and 2026 projections underscore Nigeria’s economic resilience in the face of global uncertainty, while highlighting the importance of coordinated and disciplined policymaking. With sustained reforms and prudent management, the bank believes the economy is well-positioned to achieve stronger growth, lower inflation and improved living standards in the year ahead.