Partner and Lead for Strategy & West Africa at PwC, Olusegun Zacchaeus, has projected that Nigeria’s inflation will decline to 26 percent, while the exchange rate will remain stable in 2025.

Zacchaeus made the projection at the PwC and BusinessDay Executive Roundtable on Nigeria’s 2025 Budget and Economic Outlook with the theme, “Insights and Strategies for Navigating Nigeria’s Economic, Fiscal and Policy Landscape in 2025″.

In his presentation titled, “2025 Economic Outlook: Critical Issues for Consideration”, Zaccheaus said: “Inflation is expected to decline to 26% in 2025 on the back of monetary policy tightening and improving dynamics in Nigeria’s foreign exchange market. The exchange rate is expected to remain stable in 2025 supported by CBN Foreign Exchange reforms, which are expected to drive Foreign Exchange inflows.”

He said that fiscal sustainability concerns may remain slightly elevated, given debt servicing costs and high fiscal deficit (Fiscal deficit as a percentage of GDP was 7.6% as of August 2024 exceeding the 2024 approved budget limit of 3.8%).

According to him, GDP may grow marginally by 3.3% in 2025 on the back of sustained policy reforms, albeit growth prospects may be limited by elevated economic pressures.

“The CBN may likely maintain its monetary tightening stance in 2025 with elevated interest rate, focusing on achieving long-term price stability

“Foreign exchange (FX) stability is a pivotal issue in Nigeria, as the naira depreciated by average of 39.8% in the official market in 2024 despite external reserves growing to $38.67 billion. The ease of the volatility in 2025 will be centered on five critical factors, which include price discovery, transparency and market friction, liquidity, supply and demand backlogs, and market and investor confidence.

“Price stability in Nigeria remains a significant challenge, with inflation at 34.8% in December 2024 driven by factors such as food, transport and utilities amongst others. In 2025, inflation will likely be influenced by several factors, including monetary phenomenon, supply-side dynamics, cyclical elements, sector-specific inflation, and the effects of inflation rebasing.”