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“Liberation Day” tariffs and the global turpsy turvy
One week after Trump’s “Liberation Day” tariffs announcement and the swift retaliation by the EU and China, emerging markets like Nigeria are already feeling the ripple effect. This is evident in heightened global risk aversion and a declining investor appetite.
Financial markets have clawed back some of their losses. The Dow Jones Industrial Average climbed 1,396 points (3.7%), the S&P 500 index rose 204 points (4.0%), and the Nasdaq Composite jumped 694 points (4.4%).
Despite the market rally, uncertainty around U.S. trade policy remains a major concern. President Donald Trump reaffirmed his administration’s tariff stance late Monday, warning of an additional 50% tariff on Chinese goods if China does not roll back its recent 34% tariff hike on U.S. imports by April 8, 2025.
While the threat of more tariffs has intensified trade tension, the situation leaves room for possible negotiations. Markets are watching closely for any signs of diplomatic engagement between Washington and Beijing that could de-escalate the standoff.
Nigeria’s net foreign reserves finally revealed at $23.11bn
Nigeria’s Net Foreign Exchange Reserve (NFER) is finally revealed at $23.11bn, the highest in over three years. This remarkable growth stems from the reduction of short-term FX liabilities, policy reforms that boost investor confidence, and enhanced transparency in reserve management.
The CBN attributes this improvement to market-driven reforms and disciplined fiscal management, with expectations of further reserve growth in 2025.
Additionally, the appointment of a new board for NNPCL is bound to improve governance and efficiency in the oil sector. This will potentially boost production and revenue generation, support foreign exchange stability, and economic growth. However, sustaining these gains will require continued policy consistency, investment in non-oil exports, and structural reforms to maintain macroeconomic stability.
Insecurity continues to undermine macroeconomic stability
Nigeria is at a crossroads, with growing insecurity that risks a further weakening of its already fragile macroeconomic conditions.
The recent killings of 16 travellers in Edo State, followed by the mayhem in Plateau State, are threats to agricultural productivity and the economy. This will worsen food insecurity and inflation.
According to Alesina and Perotti, “Socio-political instability generates an uncertain politico-economic environment, raising risks and reducing investment.”
In this edition of FDC Prism, we analyzed Nigeria’s escalating political and economic instability, highlighting the impact of pipeline explosions in Rivers State, governance crises threatening economic collapse, and the potential health and financial fallout of U.S. aid withdrawal in Africa.
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