Domestic Macroeconomy
This week, we spotlight the July 2025 edition of the IMF’s World Economic Outlook, which marks the second revision of the global growth forecast this year. In contrast to the previous downgrade in April, the decision to upgrade projections reflects stronger-than-expected frontloading of purchases by economic agents to minimize tariff impact, easing global monetary conditions, and improved fiscal performance across key regions.
Against this backdrop, the IMF raised its global GDP growth projection for 2025 by 0.2ppt to 3.0% (down from 3.3% in 2024) with Advanced Economies (AEs) expected to grow by 1.5% (a 0.1ppt increase), while Emerging Market and Developing Economies (EMDEs) saw a 0.4ppt boost to 4.1%. In the same vein, the IMF revised the Sub-Saharan Africa growth outlook up to 4.0% for 2025, marking a 0.2ppt increase from the April forecast. This adjustment, however, suggests a steady growth pace from 2024 (growth: 4.0%). In detail, the improved outlook was primarily driven by Nigeria’s upgraded forecast of 0.4ppt to 3.4% while South Africa’s was maintained at 1.0%.
While it may not be related, the IMF’s upward revision of Nigeria’s growth coincides with firm Q1:2025 GDP growth of 3.1% y/y (vs 2.3% in Q1:2024) under the newly rebased series. The Q1 growth signaled strong non-oil (+3.2%) and oil (+1.9%) sector performance, with the services sector up 4.3% y/y – thanks to the stellar growth in the Financial & Insurance (+15.0%), Transportation (+14.1%), and ICT (+7.4%) sub-sectors – while the industrial sector accelerated to 3.4% y/y. On the other hand, the agricultural sector was flattish at 0.1% growth owing to the 16.7% contraction in Livestock sub-sector.
Although not stated in the report, our opinion is that the IMF’s improved outlook for Nigeria may have been supported by recent gains in price and currency stability. For instance, headline inflation eased for the third consecutive month to 22.2% y/y in June, the lowest in six months. Notably, monthly inflation trended below 2.0% throughout Q2 against prior prints above 2.0% for more than a year. On the currency front, the Naira closed July at ₦1,533.55/$1.00, a modest 0.1% YTD depreciation relative to the sharp 38.8% decline over the corresponding 2024 period.
Furthermore, higher crude oil production (ex-condensates: +13.4% y/y to average 1.47mbpd in H1:2025; with-condensates: +10.9% y/y to 1.70mbpd) alongside recent uptrend in Brent price (from as low as $63.12/bbl in April to $71.78/bbl in July) could have supported the case for Nigeria. We highlight the impact of enhanced contributions of modular and Dangote refineries which drove a 11.5% rise in Oil Refining in Q1:2025. Overall, these have played favourably for reserve accretion, Current Account balance (to remain decent at $11.8bn in FY:2025 by our projection), inflation and output growth.
In all, the IMF’s revised growth forecast of 3.4% for Nigeria broadly aligns with our earlier projection of 3.3% for 2025. Despite the fragile agricultural performance in H1, the services sector should remain a pillar for sustained domestic resilience and steady momentum. As noted in our previous macro update, downside risks persist and are sustained by structural challenges in agriculture, tight credit conditions, escalating debt levels, and volatile global fabric, as the US vs world tariff war spills into H2. Nonetheless, these risks are counterbalanced by improving domestic macro fundamentals from reform efforts and sector-specific tailwinds that should support resilience.
Domestic Equities Market: Bullish Outing on Customs Street… ASI up 5.1% w/w
The domestic equities market performance was guided by increased buying activities in fundamentally sound stocks on the back of corporate earnings releases. As such, the NGX-ASI rose 5.1% w/w to 141,263.05 points. Likewise, market capitalisation rose by 5.1%, translating to a ₦4.3tn gain to close at ₦89.4tn, while YTD return strengthened to 37.2% (previously 30.6%). Activity level improved as average volume and value traded increased 31.6% and 33.8% w/w to 969.4m units and ₦29.9bn, respectively. Top traded stocks by volume were FCMB (526.1m units), FIDELITYBK (491.3m units), and UNIVINSURE (227.5m units), while GTCO (₦12.3bn), MTNN (₦12.2bn), and FIDELITYBK (₦10.3bn) led by value.
Across our coverage sectors, performance was positive, as four indices gained, while the other two closed in the red. The Industrial Goods and Banking indices topped the leaderboard with a weekly gain of 10.1% and 3.5%, respectively, driven by price appreciation in WAPCO (+19.2%), BETAGLAS (+16.7%), GTCO (+5.9%), and UBA (+4.8%). Following suit, the Consumer Goods and AFR-ICT indices rose 2.7% and 0.6% w/w, respectively, due to buy interest in DANGSUGAR (+12.9%), NASCON (+10.6%), MTNN (+20.0%), and CWG (+5.1%). On the flip side, the Insurance and Oil & Gas indices shed 1.2% and 0.5% w/w respectively due to price decline in CORNERST (-16.0%), MANSARD (-7.0%), OANDO (-11.6%) and ETERNA (-5.4%).
Investor sentiment, as measured by market breadth, remained flat at 0.1x as 52 stocks gained, 47 lost, while 44 remained unchanged. Top gainers for the week were UACN (+60.7%), MECURE (+41.5%), and CUSTODIAN (+27.9%), while ABBEYBDS (-34.1%), FTNCOCOA (-20.3%), and CORNERST (-16.0%) topped the losers’ chart. Next week, we expect the bourse to sustain the positive momentum as investors continue to respond to earnings releases and cherry-pick stocks with attractive valuations.
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