Zedcrest forecasts Nigeria’s GDP to grow 3.4%, inflation to dip to 25.26% in 2025

Nigeria's economy is set for a potential upturn in 2025, as Zedcrest Research predicts a growth of 3.4% in GDP and a dip in inflation to 25.26% next year. The investment company attributes this optimism to advancements in key sectors that are expected to drive robust growth. In a recent interview, Biminiye Shukpeju, Investment Research Analyst at Zedcrest Wealth, delved into the details of their forecast and shed light on the factors underpinning their projections. Shukpeju highlighted that inflation in Nigeria has been largely influenced by FX devaluation and price increases, particularly in the PMS sector. However, with the FX depreciation stabilizing and PMS prices reaching a plateau, Zedcrest expects inflation to moderate. They anticipate a gradual decline in inflation, with projections of around 30% by the end of Q1 and 25.26% by the end of 2025, averaging at 28%. The ongoing Nigerian Monetary Policy Committee meeting has stirred discussions on the possibility of a rate hike. Zedcrest envisions a potential 50 basis points increase to align interest rates more closely with inflation rates. Shukpeju emphasized the importance of reaching a positive real interest rates regime to attract foreign investors and stabilize the economy. In terms of foreign exchange, Zedcrest foresees the Naira strengthening to around 1,750 against the US dollar. Factors contributing to this outlook include potential NPR rate hikes, increased foreign exchange reserves, the operationalization of the Dangote refinery, and the shift towards using more domestic products by real sector companies to alleviate pressure on FX. Shifting focus to the fixed income market, Zedcrest anticipates heightened interest in domestic bonds due to the current MPC rate and the expectation of declining rates in the latter half of 2025. For Eurobonds, the prospect of moderating inflation and declining global rates positions Nigerian-Euro bonds as an attractive investment option for investors seeking higher returns. Regarding sector-specific movements, Zedcrest remains upbeat about the telecom and information services sector's potential for growth in 2025. Positive reforms and increased investment in infrastructure are expected to bolster the sector's performance. Additionally, the agricultural sector, despite facing challenges from foreign exchange dynamics, is projected to contribute to GDP growth. As Nigeria navigates its economic landscape in 2025, Zedcrest's forecast provides a glimpse of optimism amidst evolving challenges and opportunities. The convergence of prudent monetary policies, sectoral reforms, and strategic investments sets the stage for a potentially brighter economic outlook for the country.