FBNQuest Forecasts 3.4% GDP Growth for Nigeria in 2025, Naira to Weaken to N1,662/$

Analysts at FBNQuest Merchant Bank project that Nigeria’s economy will maintain its recovery in 2025, with real GDP expected to grow by 3.4% by year-end. This forecast aligns with the International Monetary Fund’s recent upgrade of Nigeria’s growth outlook from 3% to 3.4%. The key driver of this momentum is the services sector—particularly financial services and ICT—benefiting from sector-specific improvements and enhanced data reporting following the recent GDP rebasing.

In the first quarter of 2025, Nigeria’s GDP grew by 3.13%, up from 2.27% a year earlier, with services accounting for over 57% of economic output. The GDP rebasing exercise significantly altered the economic landscape, expanding Nigeria’s GDP by over 30% to $251 billion and incorporating previously untracked sectors. Analysts believe this expanded data coverage will support more accurate growth tracking and policy responses.

FBNQuest predicts that the naira will weaken to N1,662 per dollar by the end of 2025. Although the Central Bank of Nigeria (CBN) has managed to stabilize the currency through monetary tightening and active intervention, the report notes that uneven foreign portfolio inflows and rising external risks could place additional pressure on the exchange rate. The naira has averaged N1,544.25/$ this year, with fluctuations remaining within a relatively narrow band.

Headline inflation is expected to temporarily spike to 32.3% in December 2025, driven by a low base effect from the previous year. However, FBNQuest stresses that this increase is technical and does not indicate renewed price pressures. In fact, inflation has already begun to decline, hitting 22.2% in June—the lowest in nearly two years—thanks to stabilizing fuel and food prices. The overall inflation trend is expected to remain downward into 2026.

Given the fragile inflation environment and ongoing currency risks, analysts anticipate that the CBN will maintain a “tightening bias” throughout 2025 to safeguard macroeconomic stability. While modest rate cuts of 25–50 basis points are possible if inflation softens substantially, a generally restrictive stance is likely to persist. The balance of policy will continue to prioritize exchange rate stability and control inflationary risks as Nigeria navigates a path from volatility to stability

Source: Business day