The Central Bank of Nigeria (CBN) has projected a 4.17% Gross Domestic Product (GDP) growth for 2025, attributing this positive outlook to fiscal and monetary reforms aimed at stabilizing the economy.
During the virtual launch of the 2025 Macroeconomic Outlook Report, the CBN emphasized that key economic indicators point to accelerated growth.
Muhammad Abdullahi, Deputy Governor of the Economic Policy Directorate, revealed this projection at the 11th edition of the National Economic Outlook.
CBN Governor, Olayemi Cardoso, also announced the establishment of a new compliance department to address economic challenges and align Nigeria with global standards. He reaffirmed confidence in the 4.17% GDP growth forecast, underscoring the impact of ongoing reforms.
Inflation dynamics and CBN’s monetary policy stance
The economic forecast follows a significant drop in Nigeria’s annual inflation rate, which fell to 24.48% in January 2025 from 34.80% in December 2024, after the National Bureau of Statistics (NBS) rebased the Consumer Price Index (CPI) to reflect current consumption patterns.
Despite the decline, food inflation remained high at 26.08% year-on-year, highlighting persistent supply chain pressures. In response, the CBN maintained its benchmark interest rate at 27.50%, signaling a cautious approach to inflation control.
Resilient GDP growth amid economic reforms
Nigeria’s economy has demonstrated resilience despite global and domestic challenges. According to NBS data, the nation’s real GDP expanded by 3.84% year-on-year in Q4 2024, from the 3.46% growth recorded in both Q4 2023 and Q3 2024 driven primarily by the services sector, posting a 5.37% increase and contributed 57.38% to the total GDP.
The World Bank forecasts a 3.3% GDP growth rate for 2025, with expectations of stronger expansion as structural reforms take hold. Between January and December 2024, GDP recorded an average growth of 3.40%, same as recorded in 2020, up from 2.74% in 2023.
Despite high interest rates, inflationary pressures, and exchange rate volatility, the non-oil sector—especially services—remains the key driver of growth. However, the agricultural sector continues to struggle with sluggish expansion, while the oil sector has made a modest positive contribution to overall GDP.
Impact of structural reforms
The Bola Tinubu administration has introduced bold economic policies, including the removal of fuel subsidies and devaluation of the naira, aimed at improving public finances. While these measures initially fueled inflation, they are expected to foster long-term economic stability.
- The World Bank reports that Nigeria’s fiscal deficit improved, declining from 6.2% of GDP in H1 2024 to 4.4% in H1 2025, reflecting improved economic fundamentals.
- The NBS noted that the rebasing of the CPI was crucial in ensuring inflation data accurately reflects economic realities, capturing shifts in consumer behavior and market trends.
While the declining inflation rate signals relief, the cost of living remains high, and inflation continues to impact various sectors. The effectiveness of CBN’s monetary policies and fiscal interventions will be critical in shaping future economic trends.
