Nigeria’s economy is expected to recover in 2025 after a difficult year, with forecasts indicating a modest increase in the value of the Naira to N1,550 versus the US dollar and a GDP growth rate of 30.6%. There is hope for the West African country as analysts credit this positive outlook to better foreign exchange management, more dollar inflows, and a favourable economic climate.
Financial Derivatives Company (FDC) Limited predicts that as important economic indicators improve, the current exchange rate, which is currently trading at about N1,650/US$, will strengthen. With its Purchasing Power Parity (PPP) value of N1,532/US Dollar, the FDC stated that the Naira is still 24.85% undervalued.
The Naira is expected to gain value, but non-oil foreign exchange inflows like remittances and Foreign Portfolio Investments (FPI) might fall, which could put pressure on the currency.
Critical economic assumptions that underpin the FDC’s projections include a crude oil price of USD 70 per barrel, oil production of 1.4 million barrels per day (mbpd), gradual policy reforms, and modest inflows of foreign direct investment (FDI).
In their analysis of Nigeria’s economic prospects at the Lagos Business School’s (LBS) Breakfast and Dinner Time Session, Bismarck Rewane and the FDC Think Tank predicted that 2025 would be challenging but also better than 2024.
The Economist Intelligence Unit (EIU), which projects higher real GDP growth in 2025–2026 due to the start of production at the Dangote Oil Refinery, concurs with this positive outlook.
“This development is expected to reduce Nigeria’s dependence on fuel imports and boost export revenue,” Rewane said, as reported by Zawya.
The refinery’s planned production increase will solve long-standing problems with Nigeria’s energy sector and provide a major boost to the country’s economy.
Along with interest rate reductions and better exchange rate stability, the FDC analysts also noted that disinflation, which is anticipated to start in the second quarter of 2025, will probably boost business and consumer confidence.
In 2025 and 2026, these factors are expected to maintain GDP growth rates of 3.6% and 3.5%, respectively.