MARKET NEWS
FBNQuest analysts forecast 3.4% GDP growth, naira at N1,662/$ by year-end
Nigeria’s economy is expected to sustain its recovery momentum as annual GDP growth is projected to close 2025 at 3.4 percent, while the naira is poised to shed some of its value to N1,662 per dollar, according to analysts at FBNQuest Merchant Bank.
According to the analysts, the GDP growth will be driven by sustained momentum in the services sector, one of the sectors that contributes the most to the total value of the economy.
“We forecast a steady continuation of Nigeria’s economic recovery, with real GDP growth forecast at 3.4% in 2025,” FBNQuest Merchant Bank said in its mid-year economic outlook titled ‘Steering the course from volatility to stability.’
“Financial services and ICT are expected to benefit from sector-specific tailwinds and improved data capture from the recent GDP rebasing.”
The Lagos-based research and investment bank’s forecast aligns with that of the International Monetary Fund, which recently elevated Nigeria’s annual GDP growth to 3.4 percent from the 3 percent it had earlier projected.
In the first quarter of 2025, Nigeria’s economy grew 3.13 percent, buoyed by the services sector, which contributed 57.50 percent to the aggregate GDP, according to the National Bureau of Statistics (NBS).
The growth represents 0.86 percentage points from the 2.27 percent recorded in the first quarter of 2024, even as the economy shrank by 0.63 percentage points quarter-on-quarter.
The Nigerian GDP expanded by more than 30 percent to $251 billion after the statistics bureau overhauled the economy and accounted for more sectors formerly left out of the computations.
Naira to end 2025 at N1,662/$
The naira is projected to end the year at N1,662 per dollar, driven by ‘uneven’ foreign portfolio inflows and rising external risk, according to the report.
The naira has remained largely stable this year on the back of sustained interventions from the central bank and a tightened monetary policy that’s lured portfolio investors to the country’s FX market.
“The recovery in FPI flows has been uneven, and rising external risks could weigh on sentiment. The CBN’s sustained interventions have helped stabilise the currency, but at the cost of depleting reserves. We forecast the naira to end the year at NGN/USD 1,662.”
Since January this year, the naira has traded within a narrow band, averaging N1,544.25 per dollar, with its strongest pull at N1,477.72.
The currency closed at N1533.74/$ on Friday, shedding 0.012 percent of its value from the N1533.55/$ it traded for on the prior day.
Low base effect to ‘temporarily’ push inflation to 32.3%
According to the analysts, headline inflation is expected to rise to 32.3 percent year-on-year by December 2025, driven by a low base effect in the December 2024 CPI. But the surge does not suggest renewed price pressures.
“This spike is technical and not indicative of a renewed inflation surge. Beyond this, we expect inflation to resume its gradual decline as price pressures ease.”
Inflation has slowed for the third consecutive month, dropping to 22.2 percent in June 2025, the lowest it’s been in almost two years. Consumer prices are expected to trend downward on the back of easing petrol prices and food prices.
With the inflation outlook still clouded and the need to preserve FX market stability becoming even more crucial, FBNQuest expects the monetary authorities “to maintain a tightening bias throughout 2025.”
“While a hold stance remains our base case, we acknowledge the possibility of modest policy easing later in the year, likely limited to 25–50 bps if inflationary conditions soften materially. Broadly, monetary policy is expected to remain restrictive.”
