THE Nigerian Economic Summit Group (NESG) said headline inflation could drop to 24.7 per cent in 2025 should there be improvements in fiscal and monetary policy alignment.
The economic advocacy group similarly forecasts the foreign exchange rate to stabilise at an average of N1,300 to the dollar.
It projected this in its 2025 macroeconomic outlook report, themed, ‘Stabilization in Transition: ‘Rethinking Reform Strategies for 2025 and Beyond,’ released this January.
It maintained that the anticipated reduction in inflation and improvement in the exchange rate could be achieved with better coordination between fiscal and monetary policies.
According to NESG, by aligning government spending with targeted monetary interventions, policymakers aim to curb the inflationary pressures that have plagued the Nigerian economy in recent years.
“Inflation is projected to decline to 24.7 per cent, signalling an improvement in the country’s macroeconomic stability. The exchange rate is projected to strengthen, averaging N1300/US$1 in 2025 under the ideal stabilization pathway.
“The effective coordination of fiscal policies with monetary policy measures will drive this anticipated reduction in the inflation rate,” NESG stated.
Nigeria’s inflation has surged to 34.8 per cent as of December 2024, and the exchange rate depreciates hover above N1,500/$1.
The inflationary pressure has continued to plague the Nigerian economy in recent years, especially since President Bola Tinubu’s fuel subsidy removal and foreign exchange rates unification, The ICIR can report.
In its forecast, the NESG highlighted that disciplined government spending, strategic interventions in critical economic sectors, and measures to mitigate the effects of global economic uncertainties on Nigeria’s domestic economy were among the key measures responsible for its projected improvement.
It stated that the expected strengthening of the naira is tied to a combination of favourable economic conditions, which includes higher crude oil sales, the resurgence of oil refining, and expansion in agricultural production.
“This anticipated improvement reflects the combined impact of higher crude oil sales, expanded manufacturing output due to resuscitation of oil refining sub-sector, and increased agricultural production, all contributing to enhanced foreign exchange (forex) earnings,” NESG said.
The group’s inflation projection came close to the 27 per cent forecast by the Financial Derivative Company, chaired by renowned economist Bismarck Rewane, but far apart from the 15 per cent projected by President Bola Tinubu-led federal government.
The ICIR earlier reported that some analysts have argued that the federal government’s inflation projected to drop to 15 per cent in 2025 was unrealistic as economic indices do not support such an assumption.
The President, during the presentation of the budget estimates to the joint session of the National Assembly last December, said the federal government will prune down inflation to 15 per cent in 2025.