Introduction
In recent months Nigeria’s macroeconomic statistics revealed improvements as headline inflation declined from 34.8 percent in December 2024 to a rebased 24.48 percent in January 2025 and continued to ease through mid-2025 (June 2025 at 22.22% and July 2025 at 21.88%). Output growth has shown resilience, with the International Monetary Fund (IMF) projecting GDP growth of 3.4 percent in 2025, while the Central Bank of Nigeria (CBN) remains more optimistic at 4.2 percent, citing gains from higher oil production and a recovering services sector. Foreign reserves, according to CBN, reached a three-year high of $40.11 billion in early 2025, with net reserves at $23.1 billion.
The Naira, though volatile, has posted intermittent recoveries after a turbulent 2024, and benchmark interest rates remain at record levels as the CBN fights inflation. While the data reflect signs of measured recovery in key macroeconomic indicators, the extent to which this trajectory constitutes clear macroeconomic stability remains a policy issue. The statistics hint at recovery, but for millions of Nigerians the lived experience tells a different story, raising a critical policy question: stability for whom, and to what end? Nobel laureate Joseph Stiglitz once remarked, “GDP tells you nothing about whether people’s lives are actually improving.” In Nigeria’s case, the disconnect between macroeconomic statistics and everyday realities is glaring.
Households are faced with food crises. The Food and Agriculture Organization (FAO) projects that 33.1 million Nigerians will face high food insecurity in 2025, the International Monetary Fund (IMF) notes that low agricultural productivity and high food prices exacerbate the situation, and the World Bank reports that over 31 million people experienced acute food insecurity in 2024. Energy bills are unrelenting, and transport costs consume an increasing share of disposable income. Micro, Small, and Medium Enterprises (MSMEs), responsible for over 80 per cent of jobs, struggle with high borrowing costs, naira volatility, and shrinking consumer demand. In essence, improvements in national output have failed to translate into household welfare gains.
This policy brief suggests Nigeria's macroeconomic growth has not translated into real welfare gains for citizens due to factors like high inflation, weak infrastructure, structural rigidities, and reliance on oil exports, which lead to instability. The brief will examine these drivers, analyse their effects on households and businesses, and propose policy solutions to improve welfare, focusing on economic diversification, infrastructure development, better fiscal management, and stronger regulatory frameworks.
Economic trends and outlook
Nigeria’s macroeconomic performance indicates measured improvement in early 2025, yet many households and businesses continue to feel the economic pinch. Headline inflation has gradually eased from early 2025, and core inflation, which excludes volatile food and energy items, also moderated, indicating broader price stabilisation (see graph 1). While these trends hint at a macroeconomic recovery, the benefits have yet to translate into tangible relief for the average citizen or business.
Graph 1: Monthly headline and core inflation
Source: Author’s computation | National Bureau of Statistics (2025)
GDP growth has shown modest resilience, rising from 3.19 percent in Q2 2024 to 3.84 percent in Q4, before easing to 3.13 percent in Q1 2025 (see graph 2), with the IMF projecting 3.4 percent growth for 2025 while the CBN expects 4.2 percent. However, per capita income has declined, with the IMF reporting GDP per capita at $835.49 in 2025, down from $877.07 in 2024, reflecting a long-term downtrend since 2014, when it stood at $3,220, despite modest aggregate growth. Graph 2: Quarterly GDP Growth [
Source: Author’s computation | CBN/Oilprice.com (2025)
Nigeria’s external position remains fragile despite headline improvements. Foreign exchange reserves reached a three-year high of $40.2 billion at the end of 2024, with net reserves at $23.1 billion. By Q2 2025, reserves declined slightly to $37.2 billion due to debt servicing obligations and Central Bank interventions to stabilise the naira, reflecting the fragility of Nigeria’s external position.
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Graph 3: Brent Crude Oil Price Trend 
Crude oil exports, which contribute significantly to government revenue, have shown a steady decline amid price volatility. Graph 3 illustrates Nigeria’s crude oil export trends (million barrels per day) in 2025. This decline, coupled with fluctuating oil prices, illustrates the economy’s vulnerability to external shocks and the challenges of sustaining public spending, servicing debt, and supporting economic growth.
When growth fails to deliver: The realities on the ground
Despite signs of macroeconomic recovery, Nigerians continue to face high living and operating costs. In 2024 to 2025, Nigerian households spent 55–59 percent of their income on food, the highest globally, due to persistent inflation and rising commodity prices. Poverty remains high, with nearly 56 percent of Nigerians living below the national poverty line, according to the World Bank. According to NESG's 2025 Private Sector Outlook, approximately 30 percent of Nigeria's MSMEs shut down during this period due to challenges such as rising production costs, inflation, and unreliable electricity supply. Coping strategies such as reduced dietary diversity, informal borrowing, and deferred healthcare have become common, reflecting the gap between headline statistics and daily realities. Growth remains concentrated in capital-intensive sectors like oil and telecommunications, generating limited employment and reinforcing inequality. Fiscal pressures, including nearly half of revenue devoted to debt servicing and the depletion of foreign reserves through FX interventions, constrain government investment in social safety nets and infrastructure, highlighting the fragility of Nigeria’s economic recovery.
Policy priorities for Q4’ 2025
As Nigeria enters Q4 2025, policies must address household hardships and business constraints. Tackling food inflation requires better security in agricultural belts, improved logistics, and incentives for local production. Sustainable foreign exchange management should focus on non-oil exports, digital remittances, and 2025 bilateral agreements. Agreements with Brazil ($1 billion in agriculture, energy, and defence plus a space tech MoU) and Colombia (seven-sector trade agreements) can boost production, jobs, and exports. Supporting MSMEs is crucial, as around 30 percent will close between 2024 and 2025 due to high production costs, inflation, and unreliable power. Expanding targeted credit, easing regulations, and improving electricity reliability; infrastructure investment, particularly in the power sector, should also be a focal point. The government’s recent ₦4 trillion electricity sector debt refinancing plan is a positive step, but the gains must be channelled into actual improvements in electricity generation and distribution.
Conclusion and recommendations
To recapitulate, Nigeria’s economy in 2025 offers a mixed picture: progress in the numbers but frustration in daily life. Inflation is easing, GDP is growing, and reserves are healthier, yet millions of Nigerians continue to feel no relief. As the final quarter approaches, the government must seize the moment to close this gap. Thus, fiscal reforms also need to be sustained; by reducing the share of revenue consumed by debt servicing and ensuring budgets are realistic, Nigeria can free up resources for capital investment and social welfare. Equally important is the expansion of social protection mechanisms. Without these interventions, frustration and disillusionment will persist even in the face of statistical improvements. Ultimately, stability must be more than a headline figure; it must be a lived reality. Nigeria has the chance to move beyond the numbers and transform fragile calm into real progress. Whether this happens will depend on the government’s ability to prioritise inclusive policies, implement reforms with discipline, and invest in the sectors that most directly affect the lives of its citizens.
Prof. Joseph Nnanna: Chief Economist, Development Bank of Nigeria
NB: The views and opinions expressed here are solely those of the author and do not necessarily reflect the views or positions of the Development Bank of Nigeria.
