This week, we dissect the second edition of the World Bank’s bi-annual Global Economic Prospects (GEP) report and the National Bureau of Statistics (NBS) Foreign Trade Statistics, published on Tuesday.
Starting with the former, the World Bank cut its global and regional growth forecasts for 2025 and 2026 by no less than 10bps compared to projections at the start of 2025, citing international trade discord as the leading downside risk factor.
Specifically, the Bretton Woods institution slashed global growth prospects for 2025 and 2026 by 0.4ppt and 0.3ppt to 2.3% and 2.4% respectively, marking the slowest since the 2008 global financial crisis, excluding the COVID-19-induced contraction of 2.9% in 2020.
Across major regions, growth prospect in the Advanced Economies (AEs) is projected to be derailed by 0.5ppt and 0.4ppt to 1.2% and 1.4%, while the forecast for Emerging Market and Developing Economies (EMDEs) is downsized by 0.3ppt and 0.2ppt to 3.8% apiece for 2025 and 2026. For the Sub-Saharan African (SSA) region where Nigeria is located, the growth outlook was trimmed by 0.4ppt and 0.2ppt respectively to 3.7% and 4.1% in the forecast periods.
Meanwhile, the growth outlook for Nigeria for 2025 was jacked up by 0.1ppt to 3.6% and steadied at 3.7% in 2026, reaffirming the projections in its April 2025 Nigeria Development Update (NDU) report. The World Bank’s positive outlook on Nigeria was hinged on the recent positive outcomes of the Central Bank of Nigeria (CBN) policy actions – relative exchange rate stability and improved inflation anchoring.
Also, reform-induced capital investment attractions to the financial services (amidst the ongoing banking sector recapitalisation) and information & communication sectors (owing to CAPEX spend on 4G and 5G coverage expansion) underpins the buoyant outlook.
However, we are worried about the devastating ripple effect that the World Bank expects to result from the current international discord, given Nigeria’s subsisting macroeconomic fragility and worrisome social statistics. For perspective, the World Bank estimated that developing economies would suffer the most from the projected collapse of global growth to levels last seen during World War II (global growth in the 2020s is expected to average 2.5% by 2027) if global trade harmony is not restored on time.
While per capita GDP in high-income countries is expected to return to pre-COIVD level by 2027, developing economies will be worse off, with per capita GDP estimated to have fallen further by at least 6.0% on average. Excluding China, the World Bank projects that it could take about two decades for the developing economies to regain the economic and welfare loss that have and would crystalise between 2020 and 2027. The inability to optimise growth potential in the last decade and significant debt pile-up in the period underpinned the grim projections.
For Nigeria, growth momentum in the last decade remains in the shadow of the pre-2015 level of 6.2% while the population grew at a steady rate of 2.5% per annum to over 220.0m. The national debt profile skyrocketed from ₦11.3tn (c.$60.2bn at ₦187.00/$) in 2014 to well over ₦144.7tn ($92.8bn at ₦1,560.00/$) at the end 2024. Equally worrisome is the currently low quality of life indicator measure such as GDP per capita at $835.00 relative to $3,200.00 in 2014. Against this backdrop, we re-emphasis that Nigeria cannot afford to delay restoring fiscal order by prioritising inclusive growth-driven expenditure over consumption-tilted spending which, at large, fueld a near economic stagnation in most of the decade.
Borrowing from the submission of the World Bank, “developing economies (including Nigeria) would need to accelerate economic growth, upgrade the workforce’s education & skills, and set the stage for labour market to function efficiently. Whether these regions succeed or fail in tackling these challenges will determine the outlook for long-term global peace and prosperity.”
In other developments, the NBS reported that Nigeria posted a record trade surplus of ₦5.2tn in Q1:2025, trailing only the ₦5.3tn reported in Q3:2024. Total trade was up 6.2% y/y (though down 1.6% q/q) to ₦36.0tn. This was jointly driven by the 7.4% and 4.6% y/y expansion in export earnings and import bills to ₦20.6tn and ₦15.4tn, respectively. The share of crude oil in total exports, though still the largest, fell to 62.9% from 80.8% in Q1:2024 and 68.9% in the preceding quarter. The underlying driver of the y/y decline was the fall in average global crude oil price to $75.81/bbl relative to $83.00/bbl in Q1:2024 even though average output improved to 1.67mbpd (including condensate) from 1.55mbpd in the corresponding period of 2024.
Meanwhile, non-oil exports rose to the highest Naira value on record, ₦3.2tn. This translates to a 78.1% expansion y/y and 11.4% q/q. Cocoa beans (standard plus superior variants: 6.0%), urea (4.2%), and cashew nut in shell (0.8%) were the top three non-oil exports with values of ₦1.3tn, ₦855.9bn, and ₦157.7bn respectively. On the import leg, gas oil (11.9%), PMS (11.4%), and petroleum oil from bituminous minerals (7.7%) topped the import list with values of ₦1.8tn, ₦1.7tn, and ₦1.2tn respectively. Overall, Nigeria recorded a trade surplus over four regions – Africa (₦852.8bn), America (₦1.0tn), and Europe (₦5.4tn) but a deficit with Asia (-₦2.1tn) and Oceania (-₦80.8bn).
Looking ahead, we are optimistic that Nigeria will sustain the trade surplus over the near term, driven by reduced importation of petroleum products (as supplies from the Dangote refinery tempers import bills), growing investment in key cash crops such as cocoa (e.g., Johnvents group: $40.5m), sesame (BluePeak Private Capital: $25.0m), and oil palm (e.g., UNIDO & NNPAN: €300.0m), and attractive Naira valuation to buyers in Europe where supply shortfall has persisted since Russia invaded Ukraine in 2022. As such, we advocate that governments at all levels in Nigeria become more united and double down on efforts to address insecurity and invest more in modern farming equipment for Nigeria to realise its potential as one of the global food baskets in the near future.
Afrinvest
