Nigeria’s economy is expected to record slower growth in the third quarter of 2025, with gross domestic product projected to ease to 3.9 percent from 4.23 percent in the previous quarter.
This outlook was given by Bismarck Rewane, Managing Director and Chief Executive Officer of Financial Derivatives Company, during the Alpha Morgan Economic Review online session. He attributed the moderation to the delayed effects of monetary policy easing, volatile oil prices, and fluctuating capital flows.
Rewane said overall growth for the year is expected to average between 3 and 3.6 percent, in line with the International Monetary Fund’s forecast of 3.4 percent. He, however, noted that headline growth figures do not fully reflect underlying challenges such as high unemployment.
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According to the National Bureau of Statistics, inflation slowed for the fifth consecutive month to 20.12 percent in August, helped by stable fuel prices and a firmer naira. Rewane cautioned that these gains remain fragile, warning that any reversal in currency appreciation or energy price stability could halt the downward trend.
The Central Bank of Nigeria recently cut the Monetary Policy Rate to 27 percent and may lower it further to 26 percent in November if the naira maintains stability. While lower interest rates are expected to support consumer spending and borrowing, Rewane warned they could also stoke inflation if demand rises faster than supply.
On the currency market, the naira has strengthened to between ₦1,515 and ₦1,560 to the dollar, narrowing the gap between the official and parallel markets. Oil revenues, however, remain a major risk factor, with any significant fall in global prices likely to disrupt stability.
Government revenues have risen by 41 percent to ₦20.59 trillion between January and August 2025, offering states and local governments improved fiscal space. Still, public debt has surged to ₦149 trillion in the first quarter, compared with ₦121 trillion a year earlier.
Although recent rate cuts are expected to reduce annual interest costs by about ₦747 billion, Rewane warned that fiscal pressures could intensify without stronger oil receipts and increased non-oil exports.
He added that foreign portfolio inflows have risen to $5.64 billion on the back of attractive yields and a stronger naira, but long-term foreign direct investment remains weak. Going forward, he expects inflows to remain strong in the short term, particularly in equities and government securities.
Rewane noted that financial services, insurance, telecoms, transport, construction, and oil refining drove sectoral growth in the second quarter, while real estate, trade, and parts of manufacturing such as textiles and auto assembly contracted.
He also projected continued stock market gains, led by consumer goods, industrials, and telecoms, but warned that bank earnings may weaken as foreign exchange gains fade and dividend support diminishes.