Global Economy

In 2024, the global economy showed stability and growth, with major economies managing inflation and monetary policies effectively. The U.S. saw its GDP grow to $29.02 trillion, inflation ease to 2.90%, and the Federal Reserve cut interest rates to 4.48%. The U.K. experienced a decline in inflation to 2.50%, prompting a rate cut to 4.75% by the Bank of England. Japan’s GDP surged to $6.27 trillion, and the Bank of Japan raised interest rates for the first time in years. China’s GDP rose to $18.80 trillion, with policies stabilising key sectors despite external pressures. Trade tensions escalated with upcoming U.S. tariffs on Canada, Mexico, and China, which could disrupt global trade, increase costs, and pressure inflation. In response, China imposed tariffs on U.S. goods and launched an antitrust investigation into Google. The expected shift in China’s monetary policy, which suggests potential interest rate cuts, could help stabilise its economy, signalling the start of new global economic dynamics.

Domestic Economy

In 2024, Nigeria’s economy demonstrated resilience despite challenges like inflation, currency volatility, and rising fuel prices. Key sectors such as finance and ICT showed strong growth, while oil production, manufacturing, and agriculture faced difficulties. With a projected GDP growth of 3.71% in 2025, Nigeria aims to improve economic performance, though fiscal management and inflation control remain crucial. Inflation in Nigeria surged in 2024, with headline inflation reaching a peak of 34.80% in December. The rise was primarily due to the depreciation of the Naira, increasing energy costs, and security issues. Average inflation for the year stood at 33.18%, up from 24.52% in 2023. The National Bureau of Statistics (NBS) rebased the Consumer Price Index (CPI) to 2024, adjusting the basket and reweighting categories like transportation costs. For 2025, inflation is expected to slightly moderate to 30.20%, with the food index’s reduced influence potentially easing some pressures.

Fiscal Policy

Nigeria’s fiscal policy in 2024 faced challenges. The government underperformed its revenue target by 3%, mainly due to a 25% drop in oil revenues. Non-oil revenues rose by 60%, driven by VAT and Company Income Tax (CIT). A supplementary budget of N6.20 trillion was approved, increasing total expenditure to N35.06 trillion. Despite this, the government’s debt stock grew to N142.32 trillion by September 2024, a 46% increase from 2023, partly due to Naira depreciation. For 2025, Nigeria’s revenue target is set at N36.35 trillion, but challenges in meeting this target persist, particularly in oil production. The projected expenditure is N54.20 trillion, and the expected fiscal deficit is to be financed primarily through domestic borrowings.

Monetary Policy

Monetary policy in Nigeria was tight throughout 2024, with the Central Bank of Nigeria (CBN) raising the Monetary Policy Rate (MPR) by 875 basis points to 27.50% to curb inflation. The Cash Reserve Ratio (CRR) for deposit banks was raised to 50%, with the aim of reducing liquidity in the financial system. The Naira’s depreciation continued in 2024, despite efforts to attract foreign investment through interest rate adjustments and improved FX liquidity measures. By December, the Naira appreciated in certain markets, but it still closed the year weaker compared to 2023. In 2025, the CBN may consider rate cuts, depending on inflation moderation, but the MPR is expected to remain above 25% by the end of the year.

Financial Markets

In 2024, Nigeria’s financial markets experienced a mix of growth and challenges. The equities market saw strong performance, driven by sectors like Oil & Gas, Insurance, and Agriculture, while the fixed income market faced higher borrowing costs. Foreign exchange reserves rose, but the Naira continued to face depreciation pressures. As 2025 approaches, the outlook remains cautiously optimistic, with opportunities for growth in key sectors, but challenges in fiscal performance, inflation, and foreign exchange stability.

Please follow the link “2025 Economic Outlook – Beyond the Crossroads: A Path to Sustainable Progress” to view the full report.