PWC projects 3.3% growth for Nigeria
PWC projects a GDP growth of 3.3 per cent for Nigeria , driven by finance, ICT, and mining, while inflation is expected to moderate from 34.8 per cent to around 26 per cent by year-end. However, debt sustainability, exchange rate volatility, and investor confidence remain key concerns. Meanwhile they expect the government to generate a revenue of 36.3 trillion naira in 2025. In their outlook they highlight seven strategic imperatives that would help businesses to thrive in 2025. Olusegun Zaccheaus, Partner and West Africa Lead at PWC joins CNBC Africa to review their outlook on Nigeria for this year.
Tue, 28 Jan 2025 12:00:25 GMT
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AI Generated Summary
- PwC forecasts a 3.3% GDP growth for Nigeria in 2025, supported by the finance, ICT, and mining industries.
- Factors such as fiscal spending and stable monetary policies are expected to boost economic growth, though higher growth rates may require more time.
- Concerns about fiscal sustainability arise from high debt servicing costs, fiscal deficits, and potential revenue shocks affecting debt repayments.
PricewaterhouseCoopers (PwC) has projected a 3.3% GDP growth for Nigeria in 2025, with key drivers being the finance, information and communication technology (ICT), and mining sectors. Olusegun Zaccheaus, Partner and West Africa Lead at PwC, shared insights on the factors influencing this growth outlook in an interview with CNBC Africa. Zaccheaus highlighted the role of fiscal spending and monetary policies in boosting economic growth. He expressed optimism about the stability of the exchange rate and improved productivity in key sectors contributing to the projected growth rate. However, he also acknowledged that achieving higher growth rates would require more time due to fundamental shifts in productivity and capital. Regarding the rebasing exercise for GDP and the Consumer Price Index (CPI), Zaccheaus emphasized the importance of accurately measuring economic activities across various sectors to reflect the evolving structure of the economy. While the rebasing exercise provides a more accurate assessment of economic performance, he underscored the need for quality data and verification to ensure its reliability. Despite the positive outlook on GDP growth, concerns linger over fiscal sustainability, particularly related to high debt servicing costs and fiscal deficits. Zaccheaus raised questions about the government's ability to fund substantial deficits, considering potential revenue shocks that could strain debt repayment. External factors such as fluctuations in oil prices and production levels pose risks to fiscal sustainability, warranting cautious financial management. Inflation expectations for 2025 stand at around 26%, with factors like base effects and tight monetary policies likely contributing to a gradual decrease. Zaccheaus noted the importance of managing inflation expectations in alignment with budget assumptions to mitigate economic uncertainties. While PwC's projections indicate a moderate decline in inflation, the actual outcome may vary from the ambitious targets set in the budget assumption.
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