Bismarck Rewane, the renowned economist and CEO of Financial Derivatives Company Limited, has emphasized the need for power sector reforms as a critical factor in achieving Nigeria’s proposed 4.6% economic growth rate in the 2025 budget.
In an interview, Rewane shared his economic outlook for 2025, explaining his projection of 25% inflation, despite hopes for a significantly lower rate.
According to Rewane, inflation will persist due to factors such as slow GDP growth and the mismatch between money supply and goods production. However, he also suggested that inflation would ease gradually throughout the year, though it is unlikely to dip below 25%.
“Inflation is beginning to moderate and will continue to decelerate, but it’s unlikely to meet the optimistic 15% target set in the 2025 budget,” Rewane stated. He predicts that inflation will decrease from 34.6% to 25% within a year, with a monthly easing rate of around 0.8%.
Addressing the monetary environment, Rewane noted that a reduction in inflation could lead to a corresponding drop in the Monetary Policy Rate (MPR), potentially making the financial landscape more conducive for economic growth.
Rewane also projected a Naira exchange rate of N1,550/$, based on the expectation that Nigeria’s economy would move closer to dynamic equilibrium.
This would reduce the misalignment between the official and parallel exchange rates, as well as between interest rates and inflation.
However, the economist emphasized that without significant reforms in the power sector, Nigeria’s growth targets would remain out of reach.
Rewane underlined that resolving power sector challenges is vital for spurring productivity and ultimately ensuring the country’s economic expansion in the year ahead.
