Key Forecasts:
Nigeria’s headline inflation rate is projected to average 30.5% year-on-year in 2025, with a gradual decline to 27.1% by December, according to the NESG-Stanbic IBTC Business Confidence Monitor report.
The forecast hinges on a reduction in the impact of high petrol prices on inflation metrics, provided there are no unexpected disruptions in fuel pricing.
Report Highlights:
- Inflation is expected to remain above 30% through September 2025 before easing.
- Economic growth is anticipated to accelerate to 3.5% y/y in 2025, compared to 3.2% in 2024.
- A potential shift towards accommodative monetary policy by the Central Bank of Nigeria (CBN) is predicted in late 2025 as inflation moderates.
Sector Performance:
- Agriculture led economic activity in December 2024, recording a net balance of +13.93, driven by seasonal harvests.
- Non-manufacturing industries also showed resilience, with a net balance of +5.80.
- However, the manufacturing, trade, and services sectors faced challenges due to rising operational costs.
Business Confidence:
The Current Business Performance Index rose to +0.77 in December 2024, reflecting a recovery in economic activity spurred by festive demand.
- The Future Business Expectation Index recorded +28.61, signaling cautious optimism for improved conditions in Q1 2025.
Despite the challenges of inflation and currency devaluation, Nigeria’s economy shows signs of gradual recovery as government policies like FX liberalization and fuel subsidy removal begin to stabilize key sectors.
