Persistent inflation hindrance to economic growth, says expert

An economic analyst, Dominic Joshua, has said persistent inflation will hinder the country’s economic growth if not checked by the Bola Tinubu administration.

In a statement on Saturday, Joshua said Nigeria’s inflation rate is projected to increase, drawing insights from the current economic landscape and the recently unveiled 2025 national budget.

The economic analyst also stated that the exchange rate is expected to remain volatile, with naira depreciation likely due to continued pressures on foreign reserves and a widening trade deficit.

He added that the Gross Domestic Product growth rate is forecasted to improve marginally, driven by ongoing reforms in the energy and agriculture sectors.

“Persistent inflation is a significant concern, with Nigeria’s inflation rate projected to hover around double digits, exacerbating the cost of living and eroding household purchasing power. The exchange rate is also expected to remain volatile, with naira depreciation likely due to continued pressures on foreign reserves and a widening trade deficit.

“On the brighter side, the GDP growth rate is forecasted to improve marginally, driven by ongoing reforms in the energy and agriculture sectors. However, unemployment remains a critical issue as job creation struggles to keep pace with the country’s growing labour force.

“While we anticipate modest GDP growth in 2025, it’s important to recognize that this growth may not be evenly distributed across sectors,” he said.

Joshua stated that the 2025 budget underscores the government’s commitment to diversifying the economy, with increased allocations to agriculture, technology, and infrastructure development.

He emphasised the impact of government policies on economic stability, adding that the removal of fuel subsidies has freed up funds for development but increased operational costs for businesses.

“Tax reforms and measures to combat revenue leakages could bring fiscal discipline but also burden businesses with compliance challenges.

“Policymakers need to strike a balance between revenue generation and creating a conducive business environment.

“For businesses, 2025 will demand a focus on cost optimization, innovative solutions, and leveraging government incentives in targeted sectors. Individuals, meanwhile, should prioritize financial planning and investments in resilient asset classes to navigate inflationary pressures.

“Both businesses and individuals must remain agile, as economic conditions are likely to evolve in response to global and domestic shocks,” he advised.