Global Economy
In the October 2025 World Economic Outlook (WEO), titled “Global Economy in Flux, Prospects Remain Dim”, the IMF retained its global growth projection of 3.2% y/y in 2025 (2024FY: 3.3% y/y), reflecting a modest slowdown amid persistent uncertainty. Growth in advanced economies is expected to remain subdued at 1.6% y/y in 2025 (2024FY: 1.8% y/y), constrained by still tight monetary conditions due to sticky inflation and weak demand.
Meanwhile, emerging markets and developing economies are forecast to expand by 4.2% y/y (2024FY: 4.3% y/y), supported by resilient domestic activity and easing inflation pressures. The report highlights that despite trade tensions and higher US tariffs, the global economy has shown resilience due to flexible supply chains, limited retaliation, and targeted tariff exemptions.
However, risks remain tilted to the downside. This includes (1) renewed trade conflicts, (2) continued weakness in China’s property sector, (3) limited fiscal space, and (4) concerns over central bank credibility.
On the upside, easing trade frictions and productivity gains from artificial intelligence could raise growth as firms increase their adoption of AI-based tools, which is expected to aid efficient allocation of resources.
Looking ahead, the IMF expects global growth to remain steady but subdued at 3.1% y/y in 2026, as growth in advanced economies is projected to remain stable at 1.6% y/y, supported by easing inflation, gradual policy normalization, and modest recovery in investment. However, expansion in emerging markets and developing economies is expected to moderate (+4.0% y/y), driven by slower activity in China and other export-dependent Asian economies.
Recent data from the National Bureau of Statistics showed that China recorded a deflation rate of 0.3% y/y in September (August: -0.4% y/y), below market expectations of -0.1% y/y. Year-to-date, this represents the sixth deflationary print, reflecting a persistent decline in food prices, while prices in the non-food and core categories continued to show resilience. Specifically, food inflation contracted to -4.4% y/y (August: -4.3 % y/y) – the lowest level in nearly four years – driven largely by crashing pork prices resulting from lower production costs, excess supply and generally weak demand.
In contrast, non-food inflation climbed higher to +0.7% y/y (August: +0.5 y/y), supported by Beijing’s subsidies aimed at improving consumer goods purchases. Similarly, core inflation inched higher to +1.0% y/y (August: +0.9% y/y) – the highest level in 19 months – underpinned by government-led measures to encourage domestic consumption.
However, on a month-on-month basis, consumer prices rose modestly to +0.1% in September, after remaining flat in August (0.0%), suggesting that underlying momentum remains fragile. Looking ahead, deflationary pressures are expected to persist, driven by weak household demand and ongoing declines in food prices, particularly for pork. While government subsidies have provided a modest lift to the non-food and core categories, the recovery remains fragile. With consumer confidence still low and the risk of new US tariffs creating uncertainty, prices are likely to remain weak in the short term.
Global Market
Global equities delivered a mixed performance this week as investors weighed persistent US–China trade tensions, the prolonged US government shutdown, a flurry of corporate earnings, and key political and economic developments across major regions. At the time of writing, US equities (DJIA: +1.0%; S&P 500: +1.2%) were poised to close the week higher, despite ongoing geopolitical frictions and the government impasse.
Sentiment was buoyed by stronger-than-expected earnings from major banks, including JPMorgan, Goldman Sachs, Citigroup, Morgan Stanley, Bank of America, and Wells Fargo, alongside positive market reactions to Federal Reserve Chair Jerome Powell’s remarks, which reinforced expectations of a potential rate cut in October. In contrast, European equities (STOXX Europe 600: -0.2%; FTSE 100: -1.4%) trended lower as investors digested mounting fiscal concerns in the UK, mixed corporate results, and a series of uneven economic indicators across the region.
Across Asia, major indices (SSE: -1.5%; Nikkei 225: -1.1%) declined, pressured by political uncertainty in Japan, concerns over credit market risks, and renewed apprehension surrounding the US–China trade dispute. Meanwhile, the Emerging and Frontier Markets (MSCI EM: +1.0%; MSCI FM: +1.6%) indices advanced, supported by notable gains in India (+1.8%) and Vietnam (+6.2%), respectively.
Domestic Economy
According to the National Bureau of Statistics (NBS), headline inflation moderated for the sixth consecutive month, falling by 210bps to 18.02% y/y in September (August: 20.12% y/y) – the sharpest monthly drop in nearly 13 years. The decline was primarily driven by a sharp fall in food prices and a slowdown in core inflation.
Specifically, food prices tapered by 500bps to 16.87% y/y (August: 21.87% y/y), primarily driven by a notable decline in the prices of farm produce. At the same time, core inflation eased by 80bps to 19.53% y/y (August: 20.33% y/y), helped in part by the appreciation of the naira and a moderation in transport costs as fuel prices remained stable. On a month-on-month basis, headline inflation slowed by 2bps to 0.72% (August: 0.74% m/m).
Looking ahead, we anticipate a broad-based moderation in both food and core inflation components, driven by a favourable base effect, the sustained appreciation of the naira, and the ongoing main harvest season, leading to a notable decline in headline inflation. Thus, we project headline inflation to fall sharply to 16.2% in October.
According to the Debt Management Office (DMO), Nigeria’s public debt increased by 2.0% q/q to NGN152.40 trillion in Q2-25 (Q1-25: NGN149.39 trillion). We attribute the increase to additional borrowings undertaken to finance rising government expenditures, reflecting the continued shortfall in revenue. Notably, the total domestic debt stock (52.9% of total public debt) rose by 2.3% q/q to NGN80.55 trillion (Q1-25: NGN78.76 trillion), reflecting the increase in Federal government debt stock (+2.3% q/q) and states’ debt stock (+2.4% q/q).
At the same time, total external debt stock (47.1% of the total public debt) increased by 2.2% q/q to USD46.98 billion (vs +0.4% q/q to USD45.98 billion in Q1-25), due to additional borrowings from the World Bank (USD1.15 billion) and African Development Bank (USD12.14 million). In naira terms, total external debt rose by 1.7% q/q to NGN71.85 trillion (Q1-25: NGN70.63 trillion) using an average exchange rate value of NGN1,529.21/USD in Q2-25 (Q1-25: NGN1,536.32/USD). On a year-on-year basis, total debt grew by 113.5%.
Looking ahead, we expect a moderation in debt accumulation in 2025E, underpinned by reduced fiscal borrowing, particularly in the domestic debt market, reflecting the slow implementation of the 2025 budget and the sustained appreciation of the naira. We project total public debt to reach NGN152.11 trillion (35.5% of GDP) by year-end, representing a 5.1% y/y increase from NGN144.67 trillion in 2024.
Capital Markets: Equities
The domestic equities market sustained its bullish momentum, closing higher for the sixth consecutive week. Sentiment was supported by positioning ahead of third-quarter earnings releases and a positive reaction to the September inflation report, which reinforced expectations for a potential rate cut at the next policy meeting. Precisely, the All-Share Index advanced by 1.4% w/w to 148,977.64 points, driven by gains in DANGCEM (+4.4%), BUAFOODS (+3.2%), STANBIC (+8.3%), and WAPCO (+4.3%).
As a result, month-to-date and year-to-date returns improved to +4.4% and +44.7%, respectively. That said, market activity was mixed, with trading volume increasing by 5.9% w/w, while trading value declined by 15.5% w/w. Across sectors, performance was broadly positive as the Industrial Goods (+2.8%), Insurance (+2.6%), and Consumer Goods (+1.9%) indices posted gains, while the Banking (-0.1%) index declined. The Oil & Gas index remained unchanged.
Next week, sentiment is expected to remain cautiously positive, supported by expectations of solid third-quarter earnings as a fresh wave of corporate results rolls in. Key releases on the radar include WAPCO and the brewers—INTBREW, NB, and GUINNESS.
Money Market and Fixed Income
The OVN rate expanded by 10bps to 25.1% following a lower liquidity open at the end of the week. That said, the system’s net long position declined to an average of NGN1.88 trillion (vs. NGN3.82 trillion in the previous week).
Next week, we expect inflows of NGN145.98 billion from FGN bond coupon payments to bolster system liquidity, causing OVN rate to remain depressed around current level.
Treasury Bills
The Treasury Bills secondary market was bullish for most of the week but tilted bearish following liquidity pressures on the last trading day. Consequently, the average yield increased by 53bps w/w to 19.4%. By segment, NTB yields tapered by 1bp to 17.4%, while OMO yields increased by 105bps to 21.6%.
Next week, we expect anticipated inflow into the system to buoy demand for Treasury bills, potentially driving a further moderation in yields. In addition, the DMO is scheduled to conduct an NTB PMA on Wednesday, October 22, with NGN650.00 billion worth of bills on offer.
Bonds
The FGN bond secondary market traded mixed, as the average yield declined by 1bp w/w to 16.0%. Across the curve, the average yield declined at the mid (-3bps) and long (-1bp) segments following demand for the MAR-2035 (-3bps) and JUN-2038 (-21bps) bonds, respectively, while it increased at the short (+3bps) end driven by sell pressures on the JAN-2026 (+16bps) bond.
Also, the DMO released the Q4-25 bond issuance calendar, reopening the AUG-2030 and JAN-2032 bonds, respectively, and aiming to raise approximately NGN300.00 billion in October.
Given the strong supply by the DMO according to the recently released calendar, we expect yield movement to be determined by the interplay of the dovish policy tilt, strong system liquidity and demand-supply mechanisms. We also reiterate our expectations of a cautious stance at the long end of the curve, amid persistent concerns over fiscal sustainability and heightened duration risk.
Foreign Exchange
The naira depreciated this week by 1.1% w/w to NGN1,473.50/USD driven by demand pressures. Meanwhile, gross FX reserves increased for the fourteenth consecutive week, growing by USD105.90 million w/w to USD42.68 billion (October 17). In the forwards market, the naira rates depreciated across the 1-month (-0.7% to NGN1,501.26/USD), 3-month (-1.0% to NGN1,553.22/USD), 6-month (-1.3% to NGN1,629.39/USD) and 1-year (-2.1% to NGN1,779.43/USD) contracts.
We remain constructive on the naira’s outlook, underpinned by continued FX market liquidity. Domestically, stronger non-oil export flows and rising market confidence should sustain FX inflows, while externally, ample reserves, a robust current account, and a gradual turn toward looser global monetary policy are likely to bolster foreign investor appetite and attract further capital into the FX market.
Cordros
