Nigeria’s current account surplus is projected to decline sharply in 2025, dropping to 2.7% of GDP from 9.2% in 2024, according to the H2 2025 Economic Outlook Report released by CSL Stockbrokers Limited, a subsidiary of FCMB Group Plc.
The report attributes this expected moderation to weaker global crude oil prices, which continue to pressure Nigeria’s trade balance, alongside persistent deficits in services and primary income accounts.
“Although earlier tensions from the Israel-Iran conflict momentarily lifted oil price forecasts, those concerns have since waned,” the analysts noted.
“We now expect average oil prices to settle between $60 and $70 per barrel through the remainder of the year.”
According to the Central Bank of Nigeria (CBN), the country’s current and capital accounts posted a combined surplus of $17.22 billion in 2024, up significantly from $2.59 billion in 2023.
Trade Account Outlook: Exports Down, Imports Slowing
Oil prices in H1 2025 were reportedly 15% lower than the same period last year, prompting a downward revision of Nigeria’s oil export forecast, estimated to fall by 20% year-on-year to $36.4 billion, given that oil comprised roughly 86% of total exports in 2024.
Although Nigeria’s import bill is also expected to decline, largely due to reduced fuel imports as Dangote Refinery scales production, the rate of import compression may trail behind the export contraction, limiting improvements in the goods component of the current account.
“The goods trade balance will remain constrained as the decline in imports is unlikely to match the drop in oil exports,” the report added.
Services and Income Deficits Widen
CSL’s analysis anticipates wider deficits in both services and income accounts, compounding the pressures on Nigeria’s current account. The services account, driven primarily by outbound travel and transportation, has registered a consistent annual deficit of approximately $13.7 billion over the past five years, a trend that is projected to persist.
Currency depreciation and rising travel costs may dampen demand slightly, but not enough to reverse the deficit. At the same time, the income account is expected to deteriorate further due to higher repatriation payments to foreign portfolio investors and multinational oil firms.
Foreign investor activity is on the rise, with equity market participation reaching 29% YTD in May, compared to 20% in the same period last year.
Remittances Steady but Facing New Risks
In contrast, remittances, classified under the secondary income account, remain a bright spot. The report projects a rise in remittance inflows to $25.3 billion in 2025, up from $23.8 billion last year.
However, this resilience may face headwinds if a proposed U.S. bill to impose a 5% tax on outbound remittances materializes.
“Government efforts to attract $1 billion in monthly inflows may come under pressure if the U.S. legislation is passed,” the report warns.
Oil Price Sensitivity Remains Key Risk
CSL highlights that oil prices and production levels remain the primary determinants of Nigeria’s external balance outlook. In a downside scenario where oil prices fall below $55 per barrel, even with steady production around 1.22 million barrels per day (mbpd), Nigeria’s current account could swing into a deficit of 0.3% of GDP.
Conversely, a modest recovery in oil prices, averaging around $70 per barrel, could lift the current account surplus by 1 to 2 percentage points, enhancing Nigeria’s external stability.
What You Should Know
- In April, the World Bank’s April 2025 Africa’s Pulse Report projected Nigeria’s current account surplus to increase from 9.2% of GDP in 2024 to 9.4% by 2026.
- This anticipated improvement is largely driven by the depreciation of the naira, leading to reduced imports and higher worker remittances.
- The World Bank report also assesses Sub-Saharan Africa’s economic outlook, noting a slight improvement in 2024 with the regional current account deficit declining from 3.4% of GDP in 2023 to 2.4% in 2024.
