West Africa Economic Outlook: Ghana and Nigeria – Q2 2025 Update

As 2025 approaches its final quarter, Ghana and Nigeria—two of West Africa’s largest economies—have shown notable resilience amidst global economic uncertainty. Both nations are navigating inflationary pressures, fiscal adjustments, and sectoral transformations, each charting unique paths toward stability and growth.

Ghana: Services-Led Growth and Declining Inflation

Ghana’s economy expanded by 6.3% year-on-year in the second quarter of 2025, outpacing the 5.7% growth recorded a year earlier. This growth was largely fueled by a 9.9% surge in the services sector, covering finance, insurance, trade, and education. Agriculture grew modestly by 1.5%, while industry contracted slightly by 0.5%.

Inflation has steadily declined, reaching 9.4% in September, marking the ninth consecutive month of easing prices—primarily due to falling food costs. In response, the Bank of Ghana reduced its key interest rate to 21.5%, aiming to stimulate investment and consumption while maintaining medium-term inflation targets of 6–10%.

Fiscal prudence has also been evident. The government is targeting a 1.5% GDP primary surplus, supported by spending restraint and arrears management. The IMF reported a 1.1% surplus in the first eight months, indicating progress toward the year-end goal.

Outlook: The IMF projects Ghana’s GDP growth to moderate to 4.0% by year-end, due to fiscal adjustments, persistent inflation, and high interest rates. Strengthened foreign reserves, via the Ghana Gold Board (GoldBod), now totaling 37.06 tonnes of gold (~$8 billion), provide additional economic resilience. Key challenges remain in credit access, infrastructure, and sectoral diversification.

Nigeria: Oil-Led Recovery Amid Inflation Easing

Nigeria’s economy posted a 4.23% year-on-year growth in Q2 2025, the highest quarterly expansion since 2021. This growth was largely driven by a 20.5% surge in the oil sector, supported by increased crude production and new domestic refineries. Non-oil sectors also contributed, with services growing by 3.9% and agriculture by 2.8%. Notably, non-oil activities now account for 96% of Nigeria’s GDP, highlighting the progress in economic diversification.

Inflation has begun to cool, reaching 18.02% in September, down from 20.12% in August. Food inflation fell from 21.87% to 16.87%, reflecting relief from policy reforms such as fuel subsidy removal and exchange rate unification. Meanwhile, foreign reserves have strengthened to over $42 billion, accompanied by a current account surplus of 6.1% of GDP.

Fiscal measures, including the issuance of a $500 million sovereign sukuk and plans for additional debt instruments, aim to fund budget deficits and refinance Eurobonds cost-effectively.

Outlook: The IMF forecasts 3.9% GDP growth for 2025. Inflation is projected to end the year at 23%, underscoring the ongoing challenge of achieving price stability. Key areas for attention include credit access, commodity price fluctuations, and continued fiscal discipline.

Comparative Insights

Conclusion
Both Ghana and Nigeria have demonstrated economic resilience in 2025, albeit through different growth drivers. Ghana’s recovery is services-led with declining inflation and strengthened gold reserves, while Nigeria’s economy is oil-led with improving external balances and cooling inflation.

However, common challenges persist: limited access to credit, high interest rates, infrastructure gaps, and fiscal pressures. To sustain stability and accelerate growth, both countries need strategic investments, sectoral diversification, and continued reforms in fiscal and monetary policy.

As the year closes, investors, policymakers, and business leaders must closely monitor these economies’ monetary policies, inflation trends, and commodity price exposures to navigate opportunities and risks effectively.

🇬🇭 Ghana

1. GDP Growth: Ghana's economy expanded by 6.3% year-on-year in Q2 2025, driven by a 9.9% surge in the services sector. Reuters
2. Inflation Trends: Inflation eased to 9.4% in September 2025, the lowest since August 2021, attributed mainly to falling food prices. Reuters
3. Monetary Policy: The Bank of Ghana reduced its key interest rate by 350 basis points to 21.5% in September 2025. Reuters
4. Foreign Exchange Reserves: The establishment of the Ghana Gold Board (GoldBod) in March 2025 bolstered foreign exchange reserves by centralizing gold trade. Reuters
5. Fiscal Policy: The government aims for a 1.5% GDP primary surplus by the end of 2025 through spending restraint and efforts to avoid new arrears. Reuters

🇳🇬 Nigeria

1. GDP Growth: Nigeria's economy grew by 4.23% year-on-year in Q2 2025, marking the highest quarterly growth since 2021. Reuters
2. Inflation Trends: Inflation declined to 18.02% in September 2025, driven by a significant reduction in food inflation to 16.87%. Reuters
3. Monetary Policy: The Central Bank of Nigeria cut its policy rate by 50 basis points to 27.50% in September 2025. Reuters
4. Foreign Exchange Reserves: Nigeria's net foreign exchange reserves stood at $23.11 billion at the end of 2024, their highest level in three years. Reuters
5. Fiscal Policy: The Nigerian Senate approved President Bola Tinubu's plan for more than $21 billion in foreign borrowing to plug shortfalls in the 2025 budget. Reuters

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