Nigeria is bracing for a significant drop in its current account surplus in 2025, with the balance expected to shrink to 2.7% of GDP, down from a robust 9.2% in 2024.
This projection is detailed in the H2 2025 Economic Outlook released by CSL Stockbrokers Limited, a subsidiary of FCMB Group Plc, and signals mounting external vulnerabilities for Africa’s biggest oil exporter.
According to CSL, the sharp moderation stems from weakening global oil prices, growing deficits in the services and primary income accounts, and an overall worsening in trade dynamics. Despite a brief spike in oil price forecasts triggered by geopolitical tensions between Israel and Iran earlier in the year, those gains proved short-lived. Analysts now forecast average oil prices to range between $60 and $70 per barrel for the rest of 2025, a sharp drop from previous years.
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“Although earlier tensions from the Israel-Iran conflict momentarily lifted oil price forecasts, those concerns have since waned,” CSL stated in its report. “We now expect average oil prices to settle between $60 and $70 per barrel through the remainder of the year.”
Trade Balance Pressured by Falling Exports
Oil prices in the first half of 2025 were reportedly 15% lower than in the same period last year. That has prompted CSL to revise Nigeria’s oil export forecast downward, expecting a 20% year-on-year contraction to $36.4 billion. Crude oil still makes up about 86% of the country’s total exports, underscoring how deeply Nigeria’s external balance is tethered to global oil markets.
While imports are also projected to decline—mainly as Dangote Refinery ramps up production and reduces Nigeria’s reliance on imported fuel—the fall in exports is expected to outweigh the import compression. This imbalance threatens to widen Nigeria’s trade deficit, even as import substitution efforts gain momentum.
“The goods trade balance will remain constrained as the decline in imports is unlikely to match the drop in oil exports,” CSL warned.
Services and Income Accounts Continue to Weaken
Compounding the situation are persistent deficits in the services and income accounts. Nigeria’s services account—driven largely by international travel, shipping, and aviation—has posted a consistent annual deficit of roughly $13.7 billion over the past five years. Although there is a weakened naira and rising travel costs that may dampen foreign travel slightly, the services gap is unlikely to close in the near term.
Even more troubling is the deterioration in the primary income account. Higher repatriation payments to foreign portfolio investors and oil multinationals are eating into Nigeria’s surplus. These payments are rising as foreign investor activity rebounds, with equity market participation reaching 29% year-to-date in May, up from 20% in the same period in 2024.
Remittance Inflows Steady—But Now at Risk
One area that continues to provide some cushion is remittance inflows, which are projected to rise to $25.3 billion in 2025, up from $23.8 billion in 2024. These flows—captured under the secondary income account—have been critical in supporting Nigeria’s balance of payments amid growing external pressures.
However, new risks are emerging. A proposed U.S. bill that would impose a 5% tax on outbound remittances could directly impact Nigeria, one of the world’s top recipients of diaspora inflows. CSL warned that this legislation, if passed, could undermine government efforts to attract $1 billion monthly in remittance inflows.
“Government efforts to attract $1 billion in monthly inflows may come under pressure if the U.S. legislation is passed,” the firm said.
Oil Prices Remain the Wild Card
Ultimately, CSL emphasized that oil price movements and production volumes remain the biggest risks to Nigeria’s current account outlook. In a downside scenario where oil prices fall below $55 per barrel—even if production remains stable around 1.22 million barrels per day—Nigeria could slide into a current account deficit of 0.3% of GDP.
In contrast, a modest rebound in prices toward $70 per barrel could boost the surplus by 1 to 2 percentage points, offering some relief to the country’s external reserves and naira exchange rate.
Contrast with World Bank Outlook
Interestingly, CSL’s outlook contrasts with that of the World Bank, which in its April 2025 Africa’s Pulse report projected Nigeria’s current account surplus to rise slightly from 9.2% of GDP in 2024 to 9.4% by 2026. The World Bank attributed its optimistic forecast to the naira’s depreciation, which it says will help curb imports while boosting worker remittances.
Regionally, the World Bank also noted marginal improvement across Sub-Saharan Africa, where the current account deficit is projected to decline from 3.4% of GDP in 2023 to 2.4% in 2024.