Nigeria’s economy is projected to grow by 3.5% year-on-year in 2025, marking an improvement from the estimated 3.2% growth rate for 2024.
This optimistic forecast comes from the latest NESG-Stanbic IBTC Business Confidence Monitor report authored by Dr. Olusegun Omisakin, Muyiwa Oni, and Dr. Shakirudeen Taiwo. The authors attribute this anticipated growth to easing inflationary pressures and the waning impact of the government’s flagship policies on foreign exchange liberalization and the removal of fuel subsidies.
The report outlines that the second half of 2024 will witness relatively lower inflation, a factor expected to support consumer spending and stimulate business activity. According to the authors, the improved macroeconomic environment will help propel Nigeria’s economic growth to 3.5% in 2025. They noted that the gradual adjustment to policy reforms like the fuel subsidy removal and FX liberalization is creating a more stable economic foundation.
Headline inflation, while predicted to remain sticky through the first nine months of 2025, is expected to drop below 30% by September. By December 2025, inflation is forecasted to settle at 27.1%, with an annual average of 30.5%. This projection assumes no major shocks to petrol prices and anticipates smoother global and local market conditions. Declines in inflation are also expected to coincide with improved foreign exchange stability, a reduction in fiscal deficits, and better food supply chains.
The report highlighted that the high exchange rate of the naira against major global currencies had inflated import costs in recent years, adversely affecting pricing strategies and reducing profitability for many businesses. Limited access to financing remained a structural issue throughout 2024, hindering business growth, but 2025 is expected to bring some relief in this area. The Central Bank of Nigeria’s Monetary Policy Committee (MPC) may shift to a more accommodative stance by late 2025, easing borrowing costs and improving credit access for businesses.
While the government’s FX liberalization and subsidy reforms initially caused disruptions, these measures are now setting the stage for long-term economic sustainability. By addressing systemic inefficiencies and fostering greater investor confidence, these reforms aim to strengthen Nigeria’s economic fundamentals.
Experts believe that the easing of inflation, coupled with policy adjustments, will create an environment conducive to growth. Businesses are expected to recover from the challenges faced in 2024, supported by improved fiscal and monetary conditions. As the Nigerian economy finds its footing, 2025 could mark the beginning of a more stable and prosperous era for the nation’s financial landscape.
