From Adanna Nnamani, Abuja
BMI, the research arm of Fitch Solutions, has forecasted a significant trend toward monetary easing in Nigeria and other Sub-Saharan African (SSA) economies in 2025. This projection comes in light of expectations of declining inflation and increased convergence in regional monetary policies. According to a detailed report titled “Sub-Saharan Africa Macro Key Themes for 2025: Stronger Headline Growth But Structural Vulnerabilities Persist,” the research firm anticipates a reduction in regional inflation, forecasting a decline from an estimated 16.4% in 2024 to 14.2% in 2025.
The easing of price pressures is largely attributed to a drop in energy costs, with Brent crude prices expected to average $76 per barrel in 2025, down from $80 per barrel in the previous year. This reduction in energy prices, alongside anticipated improvements in currency stability, is expected to support economic growth in countries such as South Africa, Kenya, and the Democratic Republic of Congo (DRC).
BMI further emphasizes that the expected monetary easing in developed economies will provide additional room for SSA central banks to adopt accommodative policies. With the Federal Reserve projected to cut its federal funds rate to 3.50%, the narrowing of the real interest rate differential is expected to ease pressure on emerging markets by reducing the risk of capital outflows. However, challenges in key SSA economies could still result in inflation rates that remain above the region’s 2014-2023 average of 11.4%.
In Nigeria, the persistence of price pressures, particularly from the naira devaluation and the removal of fuel subsidies, is likely to keep inflation above 27% by the end of 2024, with some relief expected in 2025. Similarly, in Ethiopia, a recent currency devaluation will push inflation to 23.3%, primarily driven by rising import costs in the energy-dependent country.
Despite these inflationary challenges, BMI forecasts that SSA’s real GDP growth will accelerate to 3.8% in 2025, up from 3.5% in 2024.
Non-resource-intensive economies, including Ethiopia, Côte d’Ivoire, and Kenya, are projected to lead this growth with an expected 4.7% expansion. This growth will be supported by declining energy costs, economic liberalization, and efforts to rebuild post-conflict economies. These positive factors are anticipated to increase household incomes, boost corporate profitability, and stimulate growth in sectors such as services, construction, and banking.
Additionally, non-oil resource-intensive economies are set to benefit from the ongoing global energy transition. The DRC, which is the world’s largest cobalt producer, is projected to grow by 5.7% in 2025, while Zambia, a major exporter of copper, is expected to see a 5.4% growth rate as mining activities ramp up. South Africa, a critical minerals producer, will experience modest growth, improving from 1.0% in 2024 to 1.5% in 2025, primarily driven by increased private consumption and pension reforms.
However, traditional oil-exporting nations in SSA will continue to face challenges due to low global oil prices and underinvestment in production infrastructure. Angola’s growth is forecasted to slow from 2.2% in 2024 to just 1.1% in 2025, while Nigeria’s growth is expected to remain subdued at 3.5%, falling short of its pre-pandemic average of 3.8%.
BMI’s report underscores the mixed outlook for SSA economies in 2025. While declining inflation and the potential for monetary easing present opportunities for growth, structural vulnerabilities and external pressures continue to pose risks, particularly for economies dependent on oil exports. The report concludes that the region’s economic trajectory will be shaped by a cautious but broad-based approach to monetary easing, which will aim to stimulate growth while navigating ongoing challenges.