Global Economy

U.S.A: U.S. economic growth slowed in Q4 2024, confirmed at an annualized 2.3%, down from 3.1% in Q3, as cold weather and tariff concerns weighed on activity. The Commerce Department’s second GDP estimate showed consumer spending remained strong at 4.2%, but downward revisions to investment and private demand indicated slowing momentum. The economy expanded 2.8% in 2024, above the Fed’s estimated 1.8% non-inflationary growth rate. However, early Q1 2025 data suggests further cooling, with retail sales, housing, and job growth impacted by harsh winter conditions and uncertainty over Trump’s tariff policies. Inflation concerns persist, as the core PCE index was revised up to 2.7%, reinforcing expectations that the Fed may pause rate cuts, after lowering its benchmark rate by 100 bps since September. Policymakers remain wary of rising inflation risks from tariffs and federal spending cuts, which could further pressure growth.

Sub-Saharan African Economies

U.S.A: U.S. consumer spending fell by 0.2% in January, the first decline in nearly two years, while the goods trade deficit surged to a record high of $153.3 billion as businesses ramped up imports ahead of tariffs. The decline in spending, driven by lower outlays on goods such as vehicles and furniture, along with weather disruptions, signals a slowdown in economic momentum, with the Atlanta Fed slashing its Q1 GDP forecast to -1.5%. Meanwhile, inflation remained sticky, with the PCE price index rising 2.5% y/y, though core inflation eased slightly to 2.6% from 2.9% in December.

South Africa: South Africa’s inflation rate rose to 3.2% in January 2025, marking a four-month high but remaining below the SARB’s 4.5% target midpoint. The increase was primarily driven by food and beverages, housing and utilities, and hospitality costs. Meanwhile, core inflation eased to 3.5%, the lowest since February 2022, signaling softer underlying price pressures. On a monthly basis, CPI increased by 0.3%, reflecting a moderate uptick. The latest figures incorporate a new 2024 base year, replacing the previous 2021 benchmark.

Kenya: Kenya’s inflation rate climbed to 3.5% in February 2025, a five-month high but still below the central bank’s 5% target midpoint for the ninth consecutive month. The increase was mainly driven by higher food prices (6.4%). On a monthly basis, CPI rose 0.3%, down from 0.7% in January. Core inflation held steady at 2%, indicating subdued underlying price pressures.

Ghana: Ghana’s PMI dropped to 47.9 in January 2025, reflecting a sharper private sector downturn as new orders fell, leading to weaker output and purchasing activity. Inflationary pressures eased slightly, while business confidence hit a three-year high, fueled by optimism over improved economic conditions and potential policy support.

Domestic Economy

Major updates during the week:

  • Nigeria’s GDP grew by 3.84% in Q4 2024, up from 3.46% in Q3, with full-year growth reaching 3.40%, driven by higher government consumption and a surplus trade balance, as the NBS report also revealed a nominal GDP of ₦269.29 trillion ($181.26 billion).
  • President Bola Tinubu signed the ₦54.99 trillion 2025 budget into law on February 28, reflecting a 56.89% increase from 2024, with key allocations including ₦23.96 trillion for capital expenditure and ₦14.31 trillion for debt service, while the budget expansion was driven by BoA and BoI recapitalization, the halt of US aid, and additional revenue generation plans.

Nigerian equity market: NGX retreats into bearish territory after five-week bullish rally

The domestic stock market ended the week lower, breaking a five-week winning streak and falling below the 108,000 psychological support level due to sell pressure despite positive macroeconomic data and earnings releases. Sixty (60) equities declined, led by SUNU ASS (-19.55%), while twenty-seven (27) gained, with PZ CUSSONS (+31.11%) topping the list. Investors lost ₦421.28 billion in portfolio value, with ASI YTD return closing at 4.76%. Major drags included ETI (-12.39%), INTBREW (-7.02%), and FBNH (-4.56%), while PZ (+31.11%), UHREIT (+20.90%), and NB (+2.35%) saw gains. The Oil and Gas sector was the only one to close bullish, gaining 0.60% WoW.

Nigerian fixed-income market: The rally continues.

Market participants anticipated a decline in bond market yields this week after the DMO excluded the new 2035 bond from the auction. This drove significant demand for the 2031 bond, with total bids reaching as high as ₦1.1 trillion. At the auction, the DMO allocated ₦910 billion across the 2029 and 2031 bonds despite total bids amounting to ₦1.6 trillion, leading to an average stop rate decline of 280 basis points. This fueled buying interest in the secondary bond market, where the average yield fell by 0.94% week-on-week. The treasury bills market also extended its rally, with yields declining by 0.35% WoW. However, Nigeria’s Eurobond market ended the week slightly bearish, as the average yield edged up by 2 basis points WoW. We expect a continuation of this sentiment in the upcoming trading week.