Introduction to Nigeria’s Economic Improvement
Nigeria’s external position has seen a significant improvement in the third quarter of 2025. The country posted a Balance of Payments (BOP) surplus of $4.60 billion, which is a reversal from the deficit recorded in the previous quarter. This rebound is attributed to stronger trade performance, steady remittance inflows, higher financial flows, and a build-up in external reserves.
Factors Contributing to the Improvement
The improvement in Nigeria’s external position can be attributed to several factors. The goods account recorded a surplus of $4.94 billion, reflecting rising export earnings. Crude oil exports increased to $8.45 billion, while exports of refined petroleum products jumped by 44% to $2.29 billion. This trend underscores progress in domestic refining and Nigeria’s gradual shift from being a net importer to a net exporter of refined petroleum products.
Trade Performance
Total merchandise exports stood at $15.24 billion, while imports of refined petroleum products fell by 12.7%, strengthening the overall trade balance. This improvement in trade performance is a significant contributor to the country’s external position.
Remittance Inflows
Remittance inflows also remained robust, with the secondary income account posting a surplus of $5.50 billion. Nigerians in the diaspora accounted for $5.24 billion of that figure, highlighting the significant contribution of remittances to the country’s external position.
Financial Account and External Reserves
The financial account further supported the positive BOP outcome, with Nigeria recording a net lending position of $0.32 billion. Foreign direct investment rose to $0.72 billion, while portfolio investment inflows reached $2.51 billion, reflecting improved investor confidence and sustained foreign participation in domestic financial markets. Nigeria’s external reserves rose sharply to $42.77 billion at the end of September 2025, up from $37.81 billion at the end of June, strengthening the country’s external buffers.
Domestic Economic Activity
In a separate update, the Central Bank of Nigeria reported that domestic economic activity gained further momentum in December 2025. The Composite Purchasing Managers’ Index (PMI) rose to 57.6 points, well above the 50-point expansion threshold. This reading is described as the strongest pace of activity in nearly five years.
Sectoral Performance
Sectoral data showed sustained expansion across major employment-generating areas, with agriculture posting 58.5 points, industry 57.0 points, and services 51.9 points, indicating broad-based growth. The PMI survey revealed that 32 of the 36 subsectors tracked recorded expansion in output, new orders, and employment, pointing to improving domestic demand and rising productive activity, particularly outside the oil sector.
Conclusion
In conclusion, Nigeria’s external position has improved significantly in the third quarter of 2025, driven by stronger trade performance, steady remittance inflows, higher financial flows, and a build-up in external reserves. The improvement in domestic economic activity, as reflected in the PMI readings, is also a positive sign for the country’s economic prospects. The Central Bank of Nigeria attributes the stronger PMI readings to ongoing macroeconomic stabilisation efforts and policies aimed at improving the business environment, boosting confidence, and supporting growth. These measures are expected to drive job creation, enhance productivity, and reinforce optimism about economic prospects heading into the new year.
