Despite the challenges posed by the global trade tensions and the Israel-Iran war in the first half of the year, Nigeria’s economy has demonstrated remarkable resilience, according to a recent report by FSDH.
The FSDH 2025 H1 report, themed ‘Balancing on the Edge in a Fragile World,’ dissects the complex interplay of global disruptions and Nigeria’s economic performance, while providing a forward-looking projection for H2 2025.
The report identifies global trade tensions, geopolitical unrest in the Middle East, and fragile capital flows as the dominant forces shaping economic outcomes in the first half of the year.
“Despite these headwinds, Nigeria showed signs of resilience, underpinned by expanding non-oil exports, moderating inflation, and improving investor sentiment,” according to the report.
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Bukola Smith, managing director and CEO of FSDH Merchant Bank, while speaking at FSDH mid-year Economic Outlook Roundtable on the report recently, emphasized the importance of resilience and reforms.
“Nigeria has demonstrated encouraging signs of macroeconomic stability in the face of global headwinds,” Smith said.
“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,” she said.
Hakeem Muhammed, executive director, Global Markets and Institutional Banking, said investor sentiment has begun to turn positive, adding that 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 these, 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.
With the MPR at 27.5 percent, prime lending rates currently exceed 30 percent, but projected downward trends in H2 2025 offer a more favourable outlook for debt-funded expansion and capital investments, the report said.
Also, Stella-Marie Omogbai, executive director, corporate banking and branches, FSDH Merchant Bank. “Interest rates are expected to ease due to projections on MPC rates dropping to at least 27 percent, supported by fresh capital inflows in the banking industry and reduced inflation concerns.”
According to her, FSDH, in partnership with DFIs, will continue to provide funding at competitive rates to help businesses grow.
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Outlook for H2 2025
The report projects that if oil production improves and inflation continues its downward trend, Nigeria may achieve GDP growth of 4.4 percent, inflation at 17.1 percent, 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.
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