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Nigeria’s Economy Showing Signs of Macroeconomic Stability, Says CEO
Dike Onwuamaeze
The Managing Director/CEO of FSDH Merchant Bank, Bukola Smith, has declared that the Nigerian economy “has demonstrated encouraging signs of macroeconomic stability in the face of global headwinds.
“Our PMI data suggests an expanding economy, inflation is decelerating, and exchange rate reforms are strengthening market confidence. However, sustaining this progress requires deep structural reforms, especially in energy, trade, and fiscal management.”
Smith stated this during the FSDH’s Mid-Year Economic Outlook Roundtable titled: ‘Balancing on the Edge in a Fragile World’, which dissected the complex interplay of global disruptions and Nigeria’s economic performance, while providing a forward-looking projection for H2 2025.
The roundtable also witnessed the release of FSDH Nigeria’s 2025 H1 Macroeconomic Report titled ‘Nigeria Navigates a Fragile Global Landscape with Signs of Stability and Reform Momentum’.
FSDH said that global risks like the Israel-Iran conflict and a renewed tariff war under United States President Donald Trump have triggered global uncertainty, oil price volatility and trade disruptions, which impacted shaping Nigeria’s external outlook.
The report said that following a revision in the Consumer Price Index methodology, inflation dropped from 24.5 per cent in January to 23 per cent in May 2025.
According to the FSDH, the Naira showed relative stability, trading within a narrower band as foreign exchange reforms and Central Bank of Nigeria’s transparency have restored investor confidence.
It also said that although official GDP data is pending, “the Purchasing Managers’ Index (PMI) stayed above the 50-point threshold throughout H1, reflecting economic expansion across agriculture, industry, and services.”
It added, “Despite a decline in oil’s share of exports to 62.9 per cent (from 81 per cent in 2024Q1), crude oil production remains below budget benchmarks. This shortfall may affect fiscal performance unless addressed.
“The NGX All Share Index (NGX-ASI) returned 16.6 per cent YTD, outperforming many global peers, while foreign portfolio investments surged to $5.03 billion in Q1.
“Nigeria passed four major tax laws in June, aiming to harmonise tax administration, increase compliance, and improve equity. These are expected to raise the tax-to-GDP ratio from 10 per cent to 18 per cent in three years.”
According to FSDH’s Executive Director, Global Markets and Institutional Banking, Mr. Hakeem Muhammed, “investor sentiment has begun to turn positive. Nigeria’s bond and T-bill markets are attracting renewed interest, and equity markets are gaining momentum.
“At FSDH, we understand that in times like this, clarity and partnership matter more than ever. While we can’t control global events or predict every market move, we remain committed to helping you navigate the complexity with perspective, precision, and purpose”
The report also noted cautious optimism in the bond and NT-Bills market, as yields softened in response to improved macro indicators, while oil sector stocks on the NGX continued to underperform due to global crude price pressures.
The Executive Director, Corporate Banking and Branches, FSDH, Ms. Stella-Marie Omogbai, said that “with the MPR at 27.5 per cent, prime lending rates currently exceed 30 per cent, but projected downward trends in H2 2025 offer a more favourable outlook for debt-funded expansion and capital investments.
“Interest rates are expected to ease due to projections on MPC rates dropping to at least 27 per cent, supported by fresh capital inflows in banking industry and reduced inflation concerns. FSDH, in partnership with DFIs, will continue to provide funding at competitive rates to help businesses grow.”
The report projected that if oil production improved and inflation continued its downward trend, Nigeria may achieve GDP growth of 4.4 per cent, inflation at 17.1 per cent, and external reserves of $44.3 billion, provided oil output and reforms align in a best-case scenario.
However, Nigeria must leverage current momentum to deepen economic diversification, accelerate reforms in the power and petroleum sectors, and maintain coordination between fiscal and monetary policy.
