The Central Bank of Nigeria (CBN) yesterday projected that the economy will grow by 4.1 per cent in 2025, with a record decline in inflation and a continued increase in foreign exchange inflows into the country.
CBN Governor, Mr. Olayemi Cardoso gave these projections in a keynote address at launching the Nigeria Economic Summit Group 2025 Macroeconomic Outlook, adding that the foreign exchange market reforms implemented in 2025 resulted in $6 billion in foreign capital inflows into the country. In the same vein, the Federal Government has defended its projection of a decline in the inflation rate to 15 per cent this year, saying the projection is based on reality and data.
Meanwhile, the NESG has recommended measures that will help the country achieve economic stability in 2025 and 5.5 per cent economic growth rate. Also, the World Bank, while stressing the need to maintain the ongoing economic reforms, called on the Federal Government to increase in the number of beneficiaries of its social intervention so as to reduce the cost of the reforms on the poor and vulnerable Nigerians.
CBN projections Speaking at the event, Cardoso said: “Estimates of key economic indicators suggest a positive outlook for 2025 in particular; GDP growth is projected to rise to 4.17% in 2025 from 3.36% in 2024.
“This growth is anchored on sustained implementation of government reforms, stable crude oil prices and improvements in domestic oil production, increased refining capacity, driven by the Dangote refinery and the revitalization of the Port Harcourt and Warri refineries will, should significantly enhanced economic activity, a stable exchange rate will also play a crucial role in maintaining this positive trajectory.
“Domestic inflation is projected to decline in 2025 as the impact of economic reforms begins to take hold. Achieving our overall objectives require effective collaboration between monetary and fiscal authorities alongside private sector participation.
“The current account surplus is expected to be sustained in 2025 on account of a strong export performance and steady diaspora remittances. “Crude oil prices are expected to benefit from supply cuts by the OPEC and residual geopolitical tensions in the Middle East, while increased domestic crude oil and gas production supported by the full operations of major refineries will bolster the surplus. “External reserves are projected to rise steadily, propelled by expected increase in crude oil production, which could reach 2.3 million barrels per day by mid 2025. “Additionally, the expected rise in capital inflows and remittances and the reduced reliance on imported refined petroleum products due to domestic refining capacity, could conserve foreign exchange, attract investment and strengthen Nigeria’s economic resilience.”
$6bn foreign capital inflow Expressing optimism of further rise in foreign exchange inflow, the CBN Governor said: “So there’s good things ahead on the foreign exchange side, as far as I can see, our achievements with these reforms have been encouraging, and will continue to materialize into the long term. Our efforts have resulted in significant economic milestones in 2024 with over $6 billion in foreign capital inflows into Nigeria, external reserves exceeding $40 billion, signaling growing investor confidence.
Again, we emphasize reserves going up, not just in numbers, but in the quality of our reserves as we progress through 2025 we aim to ensure that the reforms are market oriented policies that will support a more competitive business environment.
This development carries significant implications for businesses operating in Nigeria, requiring them to adapt to an evolving economic landscape.” CBN priorities On the priorities of the apex bank in 2025, Cardoso said: “For the CBN, key policy priorities are to maintain price stability and build confidence. We will therefore continue to prioritize increased investor confidence, enhance efficiency of our financial markets and drive innovation across sectors. In the foreign exchange market, the bank will aim to enhance transparency and efficiency.
“It may interest you to know that the CBN will shortly be launching the foreign exchange code, which will offer clear directives on the expectations for market participants, ensuring that the market operates in a fair and transparent manner.
“We will also prioritize exchange rate stability in order to foster a more competitive and business environment and encourage the inflow of foreign investment and in addition support fiscal operations on critical sectors of the economy.” Why inflation rate will decline to 15%-Oyedele Speaking during a panel session at the event, Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, explained defended the FG’s projection that the inflation rate will decline to 15% in 2025.
He said: “First one which is perhaps one of the biggest impact is the base effect and I just want to explain in a very simple way. In 2024 the average inflation was about 33%. So it meant that N100 was how we started, we ended at N133. If things are as bad in 2025 as they were in 2024, you have a further increase of N33. “N33 over N133 is 25 per cent so the base effect alone tells you that you expect 25% all things being equal. “But all things will not be equal because in 2024 you have the FX impact. We started at N900/$, we got to N1,600 at some point it was more than that.
“We have the fuel price that went up by I don’t know whether 200% from where we started. So all of that is no longer there in fact when it comes to fuel not only is it that we had the increase in the pump price, it was also that we had scarcity. Scarcity is a factor for inflation in Nigeria. It pushes prices over because we can’t find fuel to buy. “Now we have security of supply, we have that expectation that price will be stable. Trump can also help us to bring the price down a little bit and whatever we lose to the Federation Account we make up for it from output and productivity.
So I thought to put that out there that I feel like based on the data we have, 15% inflation rate is realistic for 2025.” How to achieve economic stability-NESG Earlier in his opening address, Chairman, NESG, Mr. Olaniyi Yusuf, highlighted measures that will help the country achieve economic stability in 2025. He said: “The persistence of macroeconomic instability suggests the need to “Rethink The Strategies” to achieve economic stabilization, to improve the socioeconomic well-being of Nigerians, as we march towards economic transformation.
“The optimal pathways to stabilization policies envision a consolidation, alignment and complementarity of Monetary, Fiscal, Sectoral, Social Safety, Trade and Regulatory policies, resulting in a transition to the Consolidation Phase of the Economic Transformation Roadmap in the next twelve (12) months. “The outcome of these policies would be an enhanced policy environment characterized by improved regulatory frameworks and institutional efficiency. This environment would attract investments in growth-enhancing sectors and generate a high inclusive economic growth rate driven by strategic investments in infrastructure and innovation.” FG should increase beneficiaries of social interventions-World Bank Economist On his part, Senior Economist for Nigeria, World Bank Group, Dr. Samer Naji Matta, called on the FG to increase the number of Nigerians benefiting from its social intervention programs so as to reduce cost of the reforms on the poor and vulnerable
He said: “Now the cost of reforms comes by mainly having a higher inflation and that in the case of Nigeria specifically given that food inflation is impacted by the forex and by the fact that a lot of agriculture products are impacted by the price of petrol etc. That means that the impact of these reforms is being somewhat felt by the poor and most vulnerable more.
“And in that sense it’s very important for the government to acknowledge that or to continue on the good reforms that have started on the social protection. “But I would say to accelerate the rollout of these cash transfers, also scale them up because I think now the target is 15 million people but this could be expanded. “But more importantly to finance them over the future and if you think, if you just do simple math arithmetic, if the cost of the fuel subsidy was N10 trillion per year we can easily or the government can easily finance some of it in the budget for the poor and vulnerable to kind of reduce that cost of reform. So I think it would be very important to continue or to encourage the authorities here to scale up and accelerate these Interventions which are time bounded but also which are targeted at those that are really impacted and done through a digital way to avoid any potential misuse in the future.”
