April 23, 2025/CSL Research
The International Monetary Fund (IMF) has revised Nigeria’s 2025 economic growth forecast downward to 3.0% from the earlier projection of 3.4% in 2024. The downgrade is attributed to declining oil supply and rising global trade tensions. According to the report, the economic outlook for low-income, commodity-dependent countries like Nigeria has deteriorated. The IMF specifically highlighted that oil-exporting nations will see a reduction in earnings, which could significantly strain their fiscal positions.
Exporters are set to see weakening oil supply and declining revenues, which will affect the fiscal space, the report stated, noting that these challenges are further intensified by ongoing market volatility and asset revaluation. The Fund has warned that the current surge in global trade restrictions—particularly the sweeping new tariffs imposed by the United States and retaliatory measures from its trading partners—is creating an unprecedented level of uncertainty in the global economy which are likely to have lasting negative impacts on global demand and investment.
In our view, the reasons behind the IMF’s downgrade are valid and align with risks we previously flagged (see CSL Economic Flash Note: Navigating External and Domestic Headwinds, 28 March 2025). The uncertainty surrounding the scope, timing, and duration of U.S. tariffs—along with anticipated retaliatory measures from other countries—has significantly increased downside risks to the global economic outlook.
Although Nigeria is not directly involved in the ongoing trade disputes, it remains vulnerable through its major trading partners. As of September 2024, Europe and Asia accounted for approximately 45% and 26% of Nigeria’s total exports, respectively. A slowdown in these regions, driven by trade restrictions, could dampen demand for Nigerian crude oil and other exports, placing further pressure on the trade balance and overall economic growth. Moreover, an intensifying global trade war, combined with rising geopolitical tensions, could disrupt global supply chains—resulting in higher import costs, elevated inflation, and reduced consumer purchasing power.
That said, we believe the overall impact on Nigeria’s GDP growth will likely be modest, cushioned by resilient domestic consumption and continued strength in the non-oil sector. Additionally, the growing risk of lower oil prices and reduced production is expected to weigh
heavily on Nigeria’s current account performance. An anticipated increase in global oil supply—driven by OPEC+ plans to unwind voluntary production cuts starting in April—coupled with softer demand amid global trade tensions, could push oil prices downward in the coming months.
These pressures, alongside prospects of weaker crude oil output, may limit any significant improvement in Nigeria’s current account this year. Concerns have been heightened by recent pipeline explosions in Rivers State, which threaten to further disrupt output. In March, total oil production (including condensates) fell by approximately 4.08% month-on-month to 1.60 million barrels per day (mbpd). Under our base case scenario, assuming average crude oil production of 1.66 mbpd and prices averaging US$73 per barrel in 2025, Nigeria’s current account surplus could reach around 4.9% of GDP. However, if production drops to between 1.4–1.5 mbpd and prices fall within the US$60–70 per barrel range, the surplus could shrink to approximately 2.2% of GDP.
Click here to download full report: CSL Nigeria Daily – 23 April 2025 – Economy.pdf
