West Africa economic outlook 2025
Disinflation, local currency stability, and fiscal discipline are paving the way for macroeconomic stability in both Nigeria and Ghana
Article
• • • Deloitte Global Economics Research Center
The first ten months of 2025 have been quite eventful: The new US tariff policy has created ripples in global markets, raising risks such as potential government revenue shortfalls, capital flight, and a possible rise in global inflation from supply chain disruptions
West Africa, like much of the continent, is heavily commodity dependent, with high debt and inadequate infrastructure, leaving the region vulnerable to global changes and underscoring the importance of stronger regional trade relations
However, commodity price adjustments, particularly for gold and oil, have been beneficial for domestic inflation levels and local currency values. The macroeconomic landscape in Nigeria and Ghana has improved compared to 2024: Inflation is easing, interest rate cuts have resumed, and local currencies are not only stable but also strengthening
Real economic growth remains resilient, with visible growth prospects. Government reforms are starting to yield results as transition phases come to an end. This improving economic climate will drive a better outlook for both economies through 2027
Table of contents
- Nigeria
- Ghana
Nigeria
Resilience in the economy
Nigeria’s real gross domestic product grew 4.23% year on year in the second quarter of 2025—the fastest since 2021, following a recent rebasing exercise.1 The economy is expected to average 3.73% year-on-year growth from 2025 to 2027 (figure 1).2
Some key growth-driving factors are increased activity at the Dangote Refinery, a recovery in consumer demand as prices stabilize, improved dollar liquidity, and expansionary fiscal policy. The announcement of recent reforms3 like the new Tax Acts and Insurance Act is expected to attract more investment and strengthen the business climate. Nigeria is also preparing for elections in 2027, and the anticipated fiscal stimulus from campaign activities will likely boost growth despite inflation concerns.
Despite these positives, structural challenges continue to hinder Nigeria’s growth potential. Infrastructure gaps in critical sectors like power, transportation, and agriculture are affecting business operations. The current tight monetary policy environment, despite the 50-basis-point rate cut, is limiting credit growth, dampening business expansion plans, and overall profitability
Consumer demand to pick up as inflation moderates
Inflation fell to 18.02% in September 2025 from 32.7% a year earlier,4 largely driven by base effects, improved food supply, tight monetary policy, lower fuel prices, and a stable naira
Disinflation is expected to continue: Inflation is projected to average 21.4% in 2025, 14.9% in 2026, and 15.8% in 2027 (figure 2).5 Upcoming election spending and less restrictive fiscal policy could help increase money supply, but risk reversing gains made in controlling inflation and raise concerns about potential foreign-currency demand and naira volatility
Tight financing conditions to rein in inflation and boost capital flows
Nigeria has maintained high interest rates for the last three years to address a severe cost-of-living crisis. The Central Bank of Nigeria (CBN) recently cut its benchmark rate by 50 basis points to 27% per annum in September 2025—the first reduction in five years
Other changes include adjusting the asymmetric corridor around the policy rate to +/–250 basis points, cutting commercial banks’ cash reserve ratio to 45% from 50%, and introducing a 75% cash reserve ratio for public sector deposits.6 Inflation remains largely structural, driven by cost-push factors such as food insecurity and the exchange rate spillover effect on imported inflation. However, the CBN’s contractionary stance has partly helped limit money supply growth, boost capital inflows, and stabilize the naira.
Despite a projected inflation decrease, the CBN is expected to keep policy tight through 2025 to balance inflation control, financial stability, and address the risk of stunted growth and high operating costs. Anticipated fiscal pressures next year are also likely to prompt cautious monetary policy, leaving little room for further short-term interest rate cuts; at best, there might be modest cuts in 2026 and 2027
Improved external position, but with pockets of volatility
Nigeria’s external position has improved, with gross external reserves exceeding US$42 billion in October 2025—the highest since September 2019—which is enough to cover around eight months of imports (figure 3).7 Several factors are driving this trend, like high interest rates, improved foreign exchange inflows, and a slight rise in domestic oil production. Investor confidence is also strengthening, as government reforms restore trust in Nigeria’s economic and policy environment. The naira has stabilized between 1,450 and 1,500 per US dollar through October 2025.
Barring major shocks to domestic oil production (averaging 1.39 million barrels per day,8 excluding condensates) and global oil prices, the naira is expected to remain stable through 2025. Increased refining will further strengthen net exports and enhance Nigeria’s current account. Year-end “Detty December” events will also likely draw higher US dollar inflows from nonresidents and foreigners
However, renewed naira volatility is anticipated in 2026, driven by rising demand pressures and weaker investment flows as elections approach. Falling global oil prices pose an additional risk, with Brent prices projected to average US$58 per barrel in the last quarter of 2025 and around US$50 in early 2026.9 Consequently, the naira is forecast to weaken to an average of 1,650 per dollar in 2026 and 1,858 in 2027.10
Implications of Nigeria’s tax reform
The recent implementation of four landmark tax legislations by the federal government marks a historic shift in the country’s fiscal framework. Collectively called the “Tax Acts,” they comprise the Nigerian Tax Act 2025, the Nigerian Tax Administration Act 2025, the Nigerian Revenue Service (Establishment) Act 2025, and the Joint Revenue Board (Establishment) Act 2025
These reforms represent the most comprehensive overhaul of Nigeria’s tax system in decades, redefining its tax landscape with major implications for businesses and taxpayers, including:
- Increased compliance requirements and stricter penalties for violations, including a fiscalization process for value-added tax and a new e-invoicing system;
- Expanded role of professional advisers and service providers in helping taxpayers navigate the new framework; and
- Improved revenue mobilization, boost to investor confidence, and contributions to long-term fiscal sustainability.
Their success will depend on effective implementation, stakeholder engagement, and capacity building. If executed well, they could mark a milestone in Nigeria’s economic transformation and drive inclusive, sustainable growth
Possible impact of the 2027 elections
Nigerians will head to the polls in 2027, with political realignments already underway and expected to intensify in 2026. The current government will be evaluated on the state of the economy and how market reforms affect consumer welfare
A new coalition, called the African Democratic Congress, has emerged. Although defections have already started, potential internal leadership disputes could challenge the coalition’s stability
Ghana
Strong growth expected amid decelerating inflation and rate cuts
Ghana’s economy is outperforming Nigeria, with real GDP growth of 6.3% in the second quarter of 2025, mainly driven by fishing (16.4% growth), information and communication technology (13.1%), and finance and insurance (9.3%).11
Government initiatives like the 24-hour Economy and Accelerated Export Development Programs aim to unlock Ghana’s economic potential, create jobs, foster a supportive business environment, and attract investment. The Bibiani gold mine expansion in Western Ghana should also positively impact export revenues
Ghana’s economy is projected to grow by 5.5% in 2025, 5.9% in 2026, and 6.1% in 2027 (figure 4).12 However, several factors like fluctuations in cocoa production levels due to climate events, the spread of the swollen shoot virus, smuggling activities, and commodity price volatility could hinder these forecasts
Single-digit inflation target reached before end-2025
Ghana achieved a single-digit inflation level of 9.4% in September 2025, after about four years of double-digit levels.13 The country has experienced a steady decline in the consumer price index, driven by a strong cedi, falling nonfood prices, and reduced supply-side pressures
However, inflation is projected to average 15.6% in 2025—exceeding the Bank of Ghana’s 10% upper target—before moderating to an average of 9.7% in 2026 and rising slightly to 10.5% in 2027 (figure 5).14 Potential risks to Ghana’s inflation outlook include higher tariffs on utilities such as electricity and water and persistently high domestic food prices
Further interest rate cuts are expected as inflation falls within the BoG’s target
The BoG has resumed adjusting interest rates, implementing a cumulative 650-basis-point cut to its monetary policy rate as of September 2025.15 Currently at 21.5% per annum, this high-interest-rate environment has helped strengthen the cedi and alle
Rates are expected to stay steady through 2025 before declining to 17% by end-2026.16 While these reductions are expected to ease financing constraints and stimulate credit and domestic demand, excessive easing may jeopardize progress made in inflation control
The cedi swings from worst to one of the best-performing currencies in Africa
The cedi appreciated by over 40% in the first nine months of 2025 to an average of around 13 per US dollar, reaching about 10.3 in June (figure 6), and has continued to rise. This rebound is mainly driven by higher gold revenues, leading to greater international gold reserves. Additionally, frequent central bank interventions, successful debt restructuring, and initiatives like the Ghana Gold Board have further bolstered the cedi’s value.17
Ghana is set to receive a disbursement of US$385 million from the International Monetary Fund, following five successful staff-level reviews
The cedi is projected to average 12.33 per US dollar in 2025, 12.5 in 2026, and 12.61 in 2027.18 However, potential monetary policy easing could reverse some of these gains, especially if the demand for gold diminishes, with declining global uncertainty
Fiscal discipline, debt restructuring, and debt sustainability are the order of the day
The government has revised its 2025 expenditure forecast, reducing it from 270 billion cedi to 269 billion cedi, as actual spending in the first half of 2025 fell 14.3% below target,19 mainly due to lower interest payments and better fiscal discipline. The public debt stock has fallen by 15.65%, reaching 613 billion cedi, while the debt-to-GDP ratio is currently at 43.8%, down from 61.8% in December 2024.20—well below the IMF’s 2028 target of 55%, signaling an improvement in Ghana’s debt sustainability.
There is potential for further credit-rating upgrades as investor confidence grows. In June 2025, Fitch upgraded Ghana’s credit rating to “B–“ with a stable outlook.21
However, risks to ongoing debt-sustainability efforts remain. To address this, capital spending must increase as the government continues fiscal consolidation. Effective renomic improvements, and better public–private sector collaboration are vital to build a resilient foundation for sustained economic recovery
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The National Bureau of Statistics, Nigeria
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Economist Intelligence Unit, “One-click report: Nigeria,” accessed Oct. 29, 2025
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Other reforms that have taken place in the last two years include market-driven exchange rate, fuel subsidy removal, and various energy initiatives
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The National Bureau of Statistics, Nigeria
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Economist Intelligence Unit, “One-click report: Nigeria.”
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Central Bank of Nigeria, “Monetary policy communique no. 159,” press release, Sept. 23, 2025.
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Organization of the Petroleum Exporting Countries
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Tsvetana Paraskova, “Wall Street forecasts oil in the $50s next year,” Oilprice.com, Aug. 31, 2025.
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Economist Intelligence Unit
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Ghana Statistical Service
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Economist Intelligence Unit
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Ghana Statistical Service, “Statistical bulletin: Consumer price index (CPI),” September 2025.
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Economist Intelligence Unit, “One-click report: Ghana,” accessed Oct. 29, 2025.
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Bank of Ghana
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Economist Intelligence Unit
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Yaw Appiah-Lartey et al., “Deloitte’s analysis of the 2025 mid-year budget review of the Government of Ghana,” Deloitte, July 2025.
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Economist Intelligence Unit
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Modern Ghana, “Ato Forson presents 2025 mid-year budget review in Parliament,” July 24, 2025
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Ibid.
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Fitch Ratings; Modern Ghana, “Ato Forson presents 2025 mid-year budget review in Parliament.”
Cover image by: Rahul Bodiga
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