December 30, 2025/Coronation Report

Executive Summary  
Macroeconomic Section: Trade policy and tariffs were at the forefront of geopolitical discourse in 2025. The global economy in 2025 grew modestly as firms unwound earlier front-loaded adjustments triggered by tariff uncertainty and shifting trade policies. Global Gross Domestic Product (GDP) growth was reviewed upwards to 3.2% from 3.0% according to the IMF’s projections, despite persistent increased geopolitical risks, uneven regional economic performance, and sticky inflation.

Central banks eased rates cautiously, countries like the US cut rates by 75bps since the year started, despite intense political pressure to accelerate the easing due to lingering concerns over inflation, especially in light of the tariff face-off. The global economy in 2026 will most likely be a year of fragile stabilisation, with direction dependent on potential geopolitical flashpoints, easing inflation, and reduced trade tensions.

Domestically, 2025 unfolded with a more stable economic environment than was experienced in 2023 and 2024. Since mid-2023, the monetary authorities and the Federal Government have implemented a series of policies to aggressively tackle inflation and to stabilize the currency. The impact of these policies became evident not only in prices but also in real activity, with GDP growth firming in 2025, recording 3.98% growth in Q3 ‘25 as against 3.86% in Q3 24. This improvement was driven by higher oil export production, a rebound in trade, and stronger agricultural output, alongside continued strength in ICT and financial services. Inflation dropped decisively from 24.48% y/y in January (post-rebasing) to 14.45% y/y by November 2025. The Naira, which had depreciated by 41.03% in 2024, has so far appreciated by 6.33% to N1,446.74/US$1 in 2025 as of November. The performance of these metrics underscores an improving macroeconomic environment, reflecting stronger FX liquidity, enhanced policy coordination, and a gradual restoration of investor confidence.

The Monetary Policy Committee (MPC) did a 50bps cut on the MPR in September, bringing the policy rate to 27.00%, reflecting a cautious stance while highlighting improved liquidity conditions and a gradual easing of monetary tightness. To reinforce FX market stability and anchor investor confidence, the CBN also implemented a few key measures, including the Unified Market FX Framework and the revised FX reporting and compliance guidelines. These reforms have helped enhance transparency, improve monitoring of flows, and contribute to a more orderly exchange rate environment. The response of foreign portfolio investors (FPI) has been positive as well, with over US$10.95bn in FPI recorded by the CBN between January and November 2025. The Federal Government of Nigeria also raised US$2.35bn through a Eurobond issuance, attracting a record order book and signalling strong investor confidence in the recovering economy.

Cumulative effects of these developments in 2026

A key worry in regard to the Nigerian economy has been the very high inflation rate over the last few years, peaking at over 30% in 2024. Inflation trended lower in 2025, especially after the rebasing. In 2026, we expect inflation to continue on a broadly moderating path, easing in the first half of the year, on the back of improved FX liquidity and as policy credibility strengthens. This would be followed by a mild re-cceleration in the second half, as the December 2025 base effect fades and domestic demand strengthens, reflecting typical pre-election year dynamics, including projected higher fiscal spending, which will increase liquidity. Our outlook for the direction of the monetary policy and the exchange rate in 2026 is mainly positive.

Monetary easing is expected to proceed cautiously, while improved FX liquidity, stronger external inflows, and more investor confidence in the market reforms should help anchor exchange rate stability during the year; however, being a pre-election year, we do not rule out some possible risks.

We developed three scenarios for the Naira/US dollar exchange rate, inflation, the MPR, GDP, oil prices (Bonny Light), and oil production. Barring any significant external shocks in 2026, our outlook is segmented into a base case, an optimistic case, and a pessimistic case.

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