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Nigeria’s economy is facing significant challenges due to the recent tariffs imposed by United States President Donald Trump, according to Lukman Otunuga, Senior Market Analyst at FXTM. The 14% tariff on Nigerian exports may impact the country’s growth, considering its annual exports to the US range from $5 to $6 billion.
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Otunuga said, “Nevertheless, these tariffs may impact growth given how Nigeria’s exports to the US have ranged between $5 and $6 billion annually. One could argue that Nigeria is somewhat insulated, given how over 90 per cent of exports are crude oil and gas products. Nevertheless, growing concerns around Trump’s trade war tipping the global economy into a recession is a major risk for emerging markets.”
Nigeria remains exposed to volatile oil prices, with Brent and WTI recently logging their steepest weekly losses in over a year. Otunuga noted that crude oil has shed over 13% this month, dragging year-to-date losses closer to 15%. This development may complicate the government’s ability to implement the 2025 budget based on oil prices at $75 a barrel.
“The sharp selloff in oil could mean more pain for the Naira which is among the worst performing emerging market currencies,” Otunuga said. “Naira has shed four year-to-date versus the dollar and may extend losses if lower oil translates to falling foreign exchange reserves.”
On the data front, Nigeria will reveal its latest inflation figures in mid-April. Otunuga said, “Back in February, the annual inflation rate dropped to 23.2 per cent, its lowest level since June 2023, while food inflation also cooled to 23.5 per cent – its lowest rate since September 2022.
While the decline in CPI has been attributed to a technical adjustment, further signs of cooling price pressures could spark discussions around potential CBN rate cuts in the second half of 2025
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