Nigeria’s economy is expected to expand at a slower pace in the third quarter of 2025, with GDP growth projected to dip to 3.9 per cent from 4.23 per cent recorded in Q2.

According to managing director/CEO of Financial Derivatives Company, Bismarck Rewane, this moderation reflects the lagged impact of easing monetary policy, volatile oil prices, and shifting capital flows.

The economy is expected to expand between 3 per cent and 3.6 per cent in 2025, broadly in line with the International Monetary Fund’s forecast of 3.2-3.4 per cent.

“The economy is moving in the right direction, but only slowly,” Rewane said, stressing that a gap exists between headline GDP growth and improvements in indicators such as unemployment.

Headline inflation has declined for five consecutive months, reaching 20.12% in August, driven partly by stable petrol prices and relative naira strength.

However, Rewane warned that these gains are fragile and any reversal in exchange rate appreciation or fresh spike in energy costs could halt the disinflationary trend.

The Central Bank of Nigeria recently cut the Monetary Policy Rate to 27%, with a further reduction to 26% possible in November if naira stability persists.

“Lower interest rates are expected to boost consumer spending and borrowing, but may also trigger renewed inflationary pressures if demand outpaces supply,” he said.

The naira has strengthened to about ₦1,515/$ – ₦1,560/$, narrowing the gap between official and parallel markets, but oil revenues remain a concern.

Government revenues have improved significantly, rising to N20.59 trillion between January and August 2025, up 41% from the same period in 2024. However, public debt continues to climb, reaching N149 trillion in Q1 2025.

Rewane warns that without stronger oil revenues and non-oil exports, fiscal sustainability could come under renewed strain. Foreign portfolio investment has surged, attracted by high yields and a strengthening naira, with capital inflows rising to $5.64 billion.

Sectoral growth in Q2 was driven by financial institutions, insurance, telecoms, transport, construction, and oil refining, while contractions were noted in real estate, trade, and manufacturing subsectors.

“The stock market is projected to sustain its rally, though gains are expected to be concentrated in consumer goods, industrials, and telecoms rather than banking stocks.” Rewane warned that bank earnings may weaken as foreign exchange gains reverse and dividend support fades.