CBN Projects 4.1% Economic Growth in 2025

The Central Bank of Nigeria (CBN) has forecasted a 4.1% economic growth for 2025, along with a decrease in inflation and an increase in foreign exchange inflow.

CBN Governor, Mr. Olayemi Cardoso, shared these projections during the launch of the Nigeria Economic Summit Group 2025 Macroeconomic Outlook. He noted that foreign exchange market reforms in 2025 resulted in $6 billion in foreign capital inflows into the country.

The Federal Government has defended its projection of a decline in the inflation rate to 15% this year, stating that the projection is based on reality and data. The NESG has recommended measures to achieve economic stability in 2025 and a 5.5% economic growth rate. The World Bank has urged the Federal Government to increase the number of beneficiaries of its social intervention programs to reduce the cost of reforms on the poor and vulnerable Nigerians.

CBN Projections: Cardoso stated that key economic indicators suggest a positive outlook for 2025, with GDP growth projected to rise to 4.17% from 3.36% in 2024. This growth is anchored on sustained 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 significantly enhance economic activity. A stable exchange rate will also play a crucial role in maintaining this positive trajectory.

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Domestic inflation is projected to decline in 2025 as the impact of economic reforms begins to take hold. Achieving overall objectives requires effective collaboration between monetary and fiscal authorities alongside private sector participation. The current account surplus is expected to be sustained in 2025 due to strong export performance and steady diaspora remittances.

Crude oil prices are expected to benefit from supply cuts by OPEC and residual geopolitical tensions in the Middle East, while increased domestic crude oil and gas production supported by major refineries will bolster the surplus. External reserves are projected to rise steadily, propelled by increased 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 about further increases in foreign exchange inflow, Cardoso said: “Our achievements with these reforms have been encouraging and will continue to materialize in the long term. Our efforts resulted in significant economic milestones in 2024, with over $6 billion in foreign capital inflows into Nigeria and external reserves exceeding $40 billion, signaling growing investor confidence. 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 the efficiency of our financial markets, and drive innovation across sectors. In the foreign exchange market, the bank will aim to enhance transparency and efficiency.

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 to foster a more competitive business environment and encourage the inflow of foreign investment, in addition to supporting fiscal operations in critical sectors of the economy.”

Why Inflation Rate Will Decline to 15% – Oyedele: During a panel session at the event, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, defended the FG’s projection that the inflation rate will decline to 15% in 2025. He explained that the base effect is one of the biggest impacts. In 2024, the average inflation was about 33%, meaning that N100 started at N133. If things are as bad in 2025 as they were in 2024, there would be a further increase of N33. N33 over N133 is 25%, so the base effect alone suggests a 25% expectation, all things being equal. However, all things will not be equal because, in 2024, there was the FX impact, starting at N900/$ and reaching N1,600 at some point. Fuel prices also went up significantly, contributing to inflation. Now, with security of supply and stable prices, the expectation is that the inflation rate will be more stable. Based on the data, a 15% inflation rate is realistic for 2025.

How to Achieve Economic Stability – NESG: In his opening address, Chairman of NESG, Mr. Olaniyi Yusuf, highlighted measures to achieve economic stability in 2025. He emphasized the need to rethink strategies to achieve economic stabilization and improve the socioeconomic well-being of Nigerians. 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 months. The outcome of these policies would be an enhanced policy environment characterized by improved regulatory frameworks and institutional efficiency, attracting investments in growth-enhancing sectors and generating high inclusive economic growth driven by strategic investments in infrastructure and innovation.

FG Should Increase Beneficiaries of Social Interventions – World Bank Economist: Senior Economist for Nigeria at the World Bank Group, Dr. Samer Naji Matta, called on the FG to increase the number of Nigerians benefiting from its social intervention programs to reduce the cost of reforms on the poor and vulnerable. He emphasized that the cost of reforms comes mainly from higher inflation, which impacts the poor and vulnerable more. It is important for the government to acknowledge this and continue the good reforms that have started on social protection. Accelerating the rollout of cash transfers and scaling them up is crucial.

The target is currently 15 million people, but this could be expanded. Financing these interventions over the future is essential, and the government can easily finance some of it in the budget for the poor and vulnerable to reduce the cost of reform. Encouraging the authorities to scale up and accelerate these interventions, which are time-bound and targeted at those most impacted, is important to avoid potential misuse in the future.