The first half of 2025 was a period of “recalibration” for the Nigerian economy, which showed signs of recovery and resilience after the significant shocks of the previous year.
While structural challenges persisted, the economy saw an increase in activity and a gradual reduction in inflation. Key domestic developments included the rebasing of the Gross Domestic Product (GDP) and Consumer Price Index (CPI), which provided a more accurate picture of the economy as Nigeria’s GDP grew by 3.13% in Q1 2025, and a less severe inflationary environment (June 2025: 22.22%) while the CBN maintained an hawkish stance and held its benchmark interest rate steady at 27.5%.
Also worthy of note is the passing of four major tax reform bills aimed at improving fiscal sustainability. Amidst all of these, Nigeria remained vulnerable to external factors like volatile oil prices and global trade disputes.
Globally, the economy was marked by a mix of resilience and vulnerability, shaped by the re-emergence of U.S. trade tariffs. The U.S. economy contracted by 0.5% in Q1 2025, its first decline since Q1 2022, primarily due to a sharp increase in imports as businesses and households front-loaded purchases ahead of anticipated tariffs.
In contrast, the UK economy expanded by 0.7% in Q1, its strongest quarterly growth since Q1 2024, underpinned by a surge in home-buying and resilient manufacturing.
Similarly, the Euro Area recorded notable growth of 0.6% in Q1, with a strong performance from the Irish economy’s multinational sectors. Meanwhile, China’s GDP grew by a stronger-than-expected 5.4% in Q1, driven by a consumer goods trade-in program and a “pre-tariff rush” by exporters, though the sustainability of this growth remains in question. Overall, the World Bank projects a slowdown in global economic growth to 2.3% in 2025, the weakest pace since 2008 outside of a recession.
Looking ahead to the second half of 2025, the report anticipates that Nigeria’s recalibration will continue. The fixed income market is expected to see a gradual correction in yields, as there is growing speculation that the CBN might cut interest rates to support economic growth.
At the same time, the equity market is projected to continue its positive trend, supported by strong company earnings and improving investor confidence. In terms of the journey towards reaching a $1 trillion economy, the report recommends a coordinated and transformative policy action, that drives partnership between the private and public sectors.
While the path to full economic normalization is ongoing, the report concludes with a sense of cautious optimism, suggesting that the second half of the year will be an opportunity for both policymakers and investors to build on the stabilizing trends and navigate the evolving landscape with careful foresight.