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2025: A Year of Cautious Hope Following Economic Reforms
The Nigerian economy in 2025 is poised for modest improvements over 2024. Structural reforms, notably the Central Bank of Nigeria’s efforts to enhance transparency in the forex market, are starting to stabilize the naira and reduce its volatility. The naira currently trades at N1655/$, with expectations for it to remain stable within the N1550-N1650/$ range throughout 2025.
Nigeria’s external position has strengthened, with concessional and capital inflows increasing significantly compared to two years ago, reflecting renewed investor confidence. Additionally, ongoing oil sector investments are expected to bolster current account surplus, and ease price pressures, providing relief from reforms that have constrained living standards and the business environment.
Inflation is projected to peak and gradually decline, with forecasts indicating a reduction to the 25% range in 2025, followed by further easing to the mid-teens by 2026. To maintain this momentum, Nigeria must prioritize economic diversification, particularly in light of potential risks from fluctuating oil prices, while implementing policies that foster productivity and long-term economic resilience.
Structural deconstruction is like hitting the jackpot twice
Over the past three decades, Nigeria’s efforts to address exchange rate crises and import dependency through import restrictions have often exacerbated rather than resolved the underlying economic concerns. This calls for reexamining the perceived economic problem with a diagnostic lens.
To tackle the import dependence and weak currency problem, Nigeria needs to address production deficiency by dismantling the systemic bottlenecks that distort resource allocation, impede economic coordination, and limit productive efficiency. These bottlenecks arise from entrenched institutional inefficiencies, regulatory rigidity, and fragmented economic frameworks that fail to optimize factor utilization.
By addressing root causes of inefficiencies (such as inadequate infrastructure, regulatory barriers, and limited access to finance), structural reforms could unlock domestic productivity gains and bolster Nigeria’s export capabilities.
In this latest edition of FDC Prism, the Think Tank provides an in-depth analysis of Nigeria’s evolving economic landscape, shedding light on what lies ahead for the country in the new year.
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