Global Economy
US: The US economy contracted at an annualized rate of 0.5% in Q1 2025, marking the first quarterly decline in three years and a sharper drop than the earlier estimate of 0.2%. The deeper contraction was driven by significant downward revisions to consumer spending—which slowed to 0.5%, the weakest since 2020 (and exports, which grew just 0.4% versus the previously estimated 2.4%). These were only partially offset by a downward revision in import growth to 37.9% from 42.6%, reflecting frontloaded demand ahead of expected tariff-driven price hikes. Meanwhile, federal government spending declined 4.6%, matching earlier estimates and representing the steepest cut since Q1 2022.
Sub-Saharan African Economies
UK: The UK economy grew by 0.7% quarter-on-quarter in Q1 2025, marking its strongest expansion in three quarters and surpassing expectations of 0.6%. The growth was primarily driven by the services sector, which rose 0.7% with notable gains in administrative and support services (+3.3%) and retail trade (+1.5%). Industrial production also rebounded, up 1.1%, led by strong performance in transport equipment manufacturing (+2.7%) and machinery and equipment (+3.8%). Construction, however, was flat. On the expenditure side, gross fixed capital formation surged 2.9%, boosted by increased aircraft imports and investments in ICT, machinery, and building structures. Net trade made a positive contribution, with exports rising 3.5% and imports up 2.1%. Household consumption posted a modest 0.2% increase. On a year-over-year basis, GDP expanded 1.3%.
South Africa: South Africa recorded ZAR 11.7 billion in FDI inflows in Q1 2025, the highest since Q2 2024, up from ZAR 7.5 billion in the previous quarter. The rise was driven by foreign parent companies increasing equity stakes in local subsidiaries. However, portfolio investment swung sharply to outflows of ZAR 53.7 billion, reversing ZAR 33.4 billion in inflows from Q4 2024. The shift reflected non-resident equity sell-offs and the redemption of an international bond by a state-owned entity.
Morocco: The National Bank of Morocco held its benchmark rate at 2.25% on June 24, following a 25bps cut in March. The decision reflects continued disinflation and improving economic momentum. Headline inflation dropped to 0.4% in May, driven by easing food prices, and is now projected to average 1% by end-2025 before rising to 1.8% in 2026. Core inflation is expected to mirror this trajectory. On the growth front, the central bank highlighted robust non-agricultural activity, supported by infrastructure investment. As a result, GDP growth forecasts were revised upward to 4.6% in 2025 and 4.4% in 2026.
Domestic Economy
Major updates during the week:
- President Tinubu signed four harmonized tax reform bills into law, introducing major changes including lower PAYE, zero VAT on essentials, reduced CIT for SMEs, and the transformation of FIRS into NRS, with implementation set for January 2026.
- CBN Governor Cardoso announced plans to diversify Nigeria’s foreign reserves by holding multiple currencies, alongside efforts like new account types for Nigerians abroad, stressing that structural reforms are needed to attract capital and ensure FX stability.
- Finance Minister Wale Edun reported a revenue boost to ₦6.9trn (Jan–Apr 2025) and improved reserves and debt metrics, driven by FX reforms and fiscal discipline.
Nigerian equity market: NGX ends week positive despite midweek pullback
The Nigerian equities market extended its bullish momentum for the fifth consecutive week, closing on a positive note. Although the NGX All-Share Index (ASI) briefly crossed the 120,000 mark on Wednesday, two subsequent sessions of decline dragged it just below that level by week’s end. Overall, the ASI gained 1.57% week-on-week to close at 119,995.76 points, up from 118,138.22 points in the prior week. This rally was primarily driven by increased investor activity in the industrial, insurance, consumer goods, and banking sectors. Top gainers like NEIMETH (+60.54%), ELLAH LAKES (+31.33%), ZENITHBANK (+16.23%), and BUACEMENT (+8.53%) offset losses in counters such as OANDO (-7.38%) and BUA FOODS (-6.46%), while sectoral performance was broadly positive except for the Oil & Gas index, which declined by 2.23% WoW.
Nigerian fixed-income market: DMO maintains cautious stance at bond auction
This week at the scheduled auction, the DMO, despite receiving bids exceeding ₦600 billion, maintained a cautious approach by issuing only the ₦100 billion initially offered. A new 2032 bond was introduced with a coupon rate of 17.95%. Given the prevailing market liquidity, investor demand shifted toward the treasury bills market, resulting in a 29bps decline in average yield to 20.23%. A similar trend was observed in the bond market, where the average yield fell by 19bps to 18.38% by week’s close. Meanwhile, Nigeria’s Eurobonds recovered after a volatile week, with yields compressing by 36bps to 8.61% on average. Looking ahead, we anticipate a cautious tone from investors as they selectively position for more attractive yields.