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NESG forecasts 24.7% inflation rate, N1,300/US$1 exchange rate in 2025

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The Nigerian Economic Summit Group (NESG) has forecasted a promising economic outlook for 2025, projecting that inflation will decline to 24.7 per cent and the exchange rate will stabilize at an average of N1,300 per US dollar.

These expectations are grounded in anticipated improvements in the alignment of fiscal and monetary policies, which the NESG believes will help stabilize the economy.

The projections were outlined in the NESG’s 2025 Macroeconomic Outlook Report, which was released on Thursday, January 23, 2025, under the theme “Stabilisation in Transition: Rethinking Reform Strategies for 2025 and Beyond.”

According to the report, inflation, which has been a persistent challenge for Nigeria, is expected to reduce significantly due to better coordination between government fiscal policies and the Central Bank of Nigeria’s (CBN) monetary interventions.

The NESG’s forecast suggests a notable improvement in Nigeria’s macroeconomic stability, with inflation projected to fall to 24.7 per cent in 2025.

This would represent a significant decrease from the National Bureau of Statistics (NBS) reported inflation rate of 34.8 per cent in December 2024.

The NESG credits this reduction to an expected alignment of government spending with targeted monetary policies.

The report emphasized that by balancing fiscal measures with appropriate monetary interventions, Nigeria will be better positioned to manage inflationary pressures.

“The effective coordination of fiscal policies with monetary policy measures will drive this anticipated reduction in the inflation rate,” the report states.

READ ALSO: Emir Sanusi knocks Tinubu over rising inflation, economic hardship

Economist Dr. Sola Adebayo, while speaking on the NESG report, affirmed that fiscal and monetary policy alignment is crucial for reducing inflation in the long term.

“Inflation in Nigeria has largely been a result of the disconnect between fiscal policies, such as government spending, and the Central Bank’s monetary tightening efforts. If both arms of policy work in concert, there is a higher chance of controlling inflationary pressures,” Adebayo said.

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Financial analyst Kunle Omotayo also echoed this sentiment, noting, “The key to reducing inflation lies not just in raising interest rates but in aligning fiscal policy with those monetary measures. Strategic investments in infrastructure and essential sectors will support this alignment, ensuring more sustainable economic growth.”

In addition to inflation, the NESG projects a more stable exchange rate for the naira, forecasting that the currency will average N1,300 per US dollar in 2025. This anticipated stability is attributed to a combination of factors, including rising crude oil sales, resurgence in the oil refining sector, and increased agricultural production.

 “Nigeria’s forex earnings in 2025 will be supported by a combination of higher crude oil exports, the revitalization of the oil refining industry, and improved agricultural production,” the NESG report states.

While the NESG’s outlook is optimistic, experts note that achieving these goals will require significant policy commitment and careful management of external and internal risks.

According to Dr. Adebayo, “The macroeconomic stability projected by NESG can be realized, but global economic factors, such as oil price fluctuations and potential trade disruptions, must also be carefully monitored.”

Despite the challenges, the Nigerian government remains determined to rein in inflation. President Bola Tinubu has pledged to reduce inflation to 15 per cent by the end of 2025, a target that many experts view as ambitious but achievable with the right policy interventions.

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