Nigeria’s external reserves have climbed to $55.06 billion, while headline inflation has eased to 14.63 per cent, signalling an improvement in the country’s macroeconomic position after more than three years of economic reforms.
The reserves, which stood at $34.95 billion in May 2023, represent an increase of more than $20 billion, while inflation has fallen from a peak of 34.6 per cent in November 2024, according to the Q4 2026 Nigeria Economic Outlook Report by Economic Associates and Proshare.
The report, released under the CountryWatch economic-intelligence service, said Nigeria entered the fourth quarter of 2026 with its strongest macro-financial position since the current reform cycle began, supported by improving liquidity, moderating inflation and sustained economic growth.
It, however, cautioned that the durability and distribution of these gains remain uncertain, particularly as food inflation continues to rise and economic improvements are not being experienced uniformly across households and states.
Beyond external reserves, Nigeria’s equity market capitalisation increased from N30.37 trillion in May 2023 to N161.59 trillion, while broad money supply rose from N55.55 trillion to N141 trillion as of September 2026.
The country’s bond stock also expanded from N54.13 trillion in the second quarter of 2023 to N91.59 trillion in the second quarter of 2026, reflecting increased liquidity across major segments of the financial system.
On price stability, headline inflation declined for four consecutive months to 14.63 per cent in September 2026, while the parallel-market premium narrowed to approximately 4.7 per cent.
The Central Bank of Nigeria (www) also reduced its Monetary Policy Rate from 26.5 per cent to 23 per cent in September, following the moderation in inflation.
However, food inflation remains a major concern, rising to 19.57 per cent in August from 10.84 per cent in December 2025, indicating that the improvement in headline inflation has not translated into equivalent relief in food prices.
On economic output, Nigeria’s real Gross Domestic Product (GDP) expanded by 4.43 per cent in the second quarter of 2026, its strongest quarterly growth since the first quarter of 2022.
The expansion was broad-based, with 41 of the 46 economic subsectors recording growth. However, the pace of growth acceleration moderated to 0.20 percentage points from 0.75 percentage points in the corresponding quarter of 2025, while oil-sector performance remained volatile.
The report also highlighted improvements in state-level revenue generation, with the combined internally generated revenue of the 36 states rising by 167.4 per cent between 2022 and 2025 to N5.15 trillion.
It noted significant differences in states’ revenue structures, citing Enugu, which generated 87 per cent of its 2025 internally generated revenue from non-tax sources, and Lagos, which received just N0.29 from the Federation Account Allocation Committee (FAAC) for every N1 generated internally.
At the corporate level, the market capitalisation of the Nigerian Exchange’s top 40 companies increased from N8.3 trillion in 2016 to N93.1 trillion in 2025.
Despite the expansion, the report estimated that the companies traded at approximately 60 per cent discount to the global top 30 on market value per US dollar of net output, highlighting a valuation gap between Nigerian listed companies and their international counterparts.
The distribution of inflationary pressures also remained uneven across the country. Between December 2025 and August 2026, headline inflation declined in 24 states and the Federal Capital Territory, while food inflation increased in 32 states.
Looking ahead, Economic Associates and Proshare identified fiscal pressures, monetary liquidity, security challenges, oil production and pre-election spending as key domestic factors that could influence Nigeria’s economic trajectory over the coming year.
The report also identified the US-Iran conflict, which began on February 28, 2026, and the growing influence of artificial intelligence on global investment flows as major external developments with potential implications for the domestic economy.
Nigeria’s 2026 federal budget, valued at N68.32 trillion, carries a projected deficit of N31.46 trillion, while approximately N31.3 trillion remains sterilised through Cash Reserve Requirement and Standing Deposit Facility balances, making fiscal execution and monetary liquidity important variables for the outlook.
The Q4 2026 edition of the Nigeria Economic Outlook Report provides quarterly projections from the fourth quarter of 2026 to the fourth quarter of 2027, outlining baseline, upside and downside scenarios alongside indicators for tracking changes in the economy.
The report is the third edition of the economic assessment produced under the CountryWatch service and adopts a five-part framework covering reforms, economic outcomes, their impact across states and sectors, external and domestic shocks, and the outlook.
