Global Economy

U.S.A: The U.S. economy expanded at an annualized rate of 2.3% in Q4 2024, marking the slowest growth in three quarters, down from 3.1% in Q3 and below expectations of 2.6%, according to the BEA’s advance estimate. Personal consumption remained the primary driver, rising 4.2%—the highest since Q1 2023—driven by stronger spending on both goods (6.6%) and services (3.1%). However, fixed investment contracted (-0.6%) for the first time since Q1 2023, dragged down by declines in equipment (-7.8%) and structures (-1.1%). While consumption, net exports, and government spending contributed positively, a drop in inventories weighed on growth, subtracting over a full percentage point from GDP. Despite the slowdown, the economy has now expanded for 11 consecutive quarters, supporting optimism for a soft landing.

Sub-Saharan African Economies

Euro Area: The Eurozone economy expanded by 0.9% year-on-year in Q4 2024, maintaining the previous quarter’s pace but missing market expectations of 1% growth, according to a flash estimate. The region continues to grapple with an industrial slowdown, high energy costs, and weak consumer and government spending. A softening labor market and looming trade tensions with the U.S. have added to economic uncertainty. Among major economies, Germany remained in recession, shrinking by 0.2% year-on-year, while France and Italy posted modest gains of 0.7% and 0.5%, respectively. Spain led the pack with a robust 3.5% expansion, standing out as the region’s strongest performer.

Kenya: Kenya’s inflation rose for the third consecutive month in January 2025, reaching a four-month high of 3.3%, up from 3% in December. Despite the increase, inflation remained below the central bank’s 5% target midpoint for the eighth straight month. The acceleration was driven primarily by higher food (+6.1% vs. +4.8%) and transport (+0.7% vs. +0.1%) costs. Meanwhile, core inflation, measuring underlying price pressures, eased to 2% from 2.2%, while non-core inflation surged to 7.1%, up from 5.2% in December.

South Africa: The South African Reserve Bank lowered its key interest rate by 25bps to 7.50% on January 30, 2025, marking the third consecutive cut. While inflation remains contained, the central bank highlighted uncertainty in the medium-term outlook. Inflation is expected to stay in the lower half of the target range in early 2025 but could rise toward 4.5%, with upside risks from global factors. The 2025 inflation forecast was revised down to 3.9%, while estimates for 2026 and 2027 remain at 4.6% and 4.5%, respectively. Economic growth is expected to recover in Q4 after a slowdown, with steady expansion projected to reach 2% by 2027.

Domestic Economy

Major updates during the week:

  • The CBN launched the Nigerian Foreign Exchange Code (FX Code), to promote accountability, ensure compliance, and engender transparency in the country’s foreign exchange market
  • The CBN approved the waiver of 2025 licence renewal fee for existing bureau de change operators
  • FG approves 25-year licence for 10 gas distribution companies
  • NGX REGCO, EFCC agree to curb capital market infractions

Nigerian equity market: NGX extends positive sentiment WoW

Nigeria’s equities market wrapped up the week on a positive trajectory, supported by bargain hunting in select stocks and bullish sentiment across key indices. The All-Share Index climbed 0.87% to 104,496.12 points, extending the previous week’s gains, while market capitalization increased to ₦64.71 trillion from ₦63.65 trillion. Strong performances in CHELLARAM (+60.44%), VITAFOAM (+31.48%), BETAGLAS (+20.98%), NNFM (+20.96%), and SKYAVN (+20.66%) helped offset declines in VERITASKAP (-29.68%), MRS (-18.96%), and NEIMETH (-14.52%). Despite the overall market uptick, sectoral performance was mixed year-to-date, with three of the five major indices posting declines. The Banking sector led the gainers, advancing 4.09% week-on-week, while the Consumer Goods sector followed with an 8.15% increase.

Nigerian fixed-income market: DMO issues new 10-year bond at 22.60%.

At bond auction this week, the DMO issued new debts across 3 maturities totaling N606.5 billion and slightly above the amount on offer (N 450billion). Noteworthy to mention was the stop rate of the new 10-year bond printing at 22.60%, the highest coupon paying bond ever. In the secondary market, trading activities was largely positive. For treasury bills, there was an average WoW decline in yields by 142 bps largely driven by mid-tenor bills. For bond, there was a marginal 3 bps decline in yield, largely driven by short tenor bonds. In the Eurobond space, Nigeria’s Eurobond attracted buying interest WoW as the average yield declined by 11 bps to 9.32%. At the next trading week, we expect more buying interest in the market as investor lock in on the current securities trading level.