Standard Chartered Bank Nigeria Limited recently hosted clients to its 2025 Global Market Outlook to explore the evolving global financial landscape and its implications for Nigeria. Manpreet Gill, chief investment officer, Africa, Middle East, and Europe, Standard Chartered spoke with some selected journalists on the emerging markets and the global economy in 2025. JOHN SALAU was there and brings excerpts:
As we move on this year, what is your outlook for emerging markets in the context of the global economy?
Emerging markets are at a pivotal moment in 2025, standing at the intersection of significant global macroeconomic trends, evolving commodity markets, and ongoing structural reforms. These factors will collectively determine their trajectory in the coming year. One of the most influential elements shaping emerging markets has been the strength of the U.S. dollar. Last year’s dollar rally exerted considerable pressure on emerging market equities, bonds, and currencies. However, as we move into 2025, we anticipate a more stable dollar environment, coupled with easing U.S. bond yields, which could provide much-needed relief for many emerging market assets. This stabilization is particularly critical for nations like Nigeria, where external factors have posed persistent challenges in recent years. A softer dollar in 2025 could help create a foundation for economic recovery and growth in such markets.
What are the key risks and opportunities for global growth in 2025?
There is cautious optimism about global growth in 2025, particularly in the U.S., where the economy is expected to continue expanding, driven by strong consumer spending, business investments, and overall resilience. However, inflation remains a key risk that could act as a drag on economic performance. The Federal Reserve’s ability to manage this delicate balance between growth and inflation will be crucial. If inflation expectations rise unexpectedly, it could undermine investor confidence and lead to heightened volatility in both equity and bond markets. For investors, we are maintaining an overweight position on global equities, with a regional preference for the U.S. Despite high valuations, U.S. equities are expected to perform well, supported by robust corporate earnings and strong consumer demand. That said, volatility is likely, particularly in light of President Trump’s stated policies. His approach, which balances growth-friendly policies with potentially disruptive measures like trade tariffs or immigration curbs, could introduce both uncertainty and opportunities in the markets. The sequencing of these policies and their impact on long-term growth will be key to navigating these challenges, and equities could benefit if growth-oriented policies are effectively implemented.
How will commodity-dependent economies, particularly in Africa and the Middle East fare in 2025?
Commodity-dependent economies, especially in regions like Africa and the Middle East, will continue to be heavily influenced by global price movements in 2025. Oil and gas remain vital to these regions, but they face growing competition from renewable energy investments as the world accelerates its energy transition. Additionally, significant oil supply in global markets this year adds another layer of complexity. For example, Nigeria, one of Africa’s largest oil producers, faces the dual challenge of balancing immediate fiscal needs with the long-term imperative of diversifying its economy. Increased investment in renewables, alongside maximizing oil and gas revenues, will likely be a key component of achieving sustainable long-term growth. The global shift toward cleaner energy, including electric vehicles and renewable power sources, is reshaping the energy landscape, and emerging markets must adapt to these changes to remain competitive.
What role do structural reforms play in the growth of emerging markets?
Structural reforms have been a critical driver of growth and resilience in emerging markets over the past decade. In regions like Asia, key sectors such as real estate and high-yield bonds have rebounded strongly, setting a positive tone for 2025. Similarly, Nigeria’s diversification efforts, spanning agriculture, technology, and manufacturing signal a broader push to reduce reliance on oil exports alone. These adjustments are beginning to yield results, creating new avenues for growth and attracting foreign investment. This year, Nigeria will undertake the re-basing of its GDP, a process that recalibrates the economy’s size and composition. While often viewed as a technical exercise, GDP rebasing offers deeper insights into the economic landscape by capturing previously underrepresented sectors, such as technology and services. This re-basing could highlight the growing importance of non-oil sectors and provide clarity on growth opportunities beyond traditional industries. Such reforms are essential for building a more resilient and diversified economic foundation.
Which sectors in emerging markets, such as Nigeria, present the most growth potential for investors?
In Nigeria, two sectors stand out for their growth potential: energy and technology. Despite the global push toward renewable energy, demand for fossil fuels remains robust, particularly in emerging markets like China and India. This offers opportunities for Nigeria’s oil and gas sector to capitalise on ongoing demand. At the same time, technology presents significant growth potential, particularly in areas like artificial intelligence (AI), data centres, and energy solutions. The AI revolution, along with the increasing reliance on data and renewable energy, could drive substantial growth in these industries. For investors, these sectors represent compelling opportunities to tap into long-term growth trends.
What investment strategies do you recommend for navigating the challenges and opportunities in 2025?
A diversified investment strategy is essential for managing risks and capitalizing on opportunities in 2025. U.S. equities, high-yield bonds, and gold remain our key asset class preferences. In Asia, targeted investment strategies focused on high-dividend-paying state-owned enterprises in China and India’s rapidly growing tech sector offer promising returns. Meanwhile, European equity markets face more challenges due to the growth outlook, making them less attractive in 2025. For emerging market bonds, we prefer U.S. dollar-denominated bonds over local currency bonds due to the risks posed by currency fluctuations in a strong dollar environment. High-yield bonds in emerging markets, particularly in Asia, are showing signs of recovery from previous underperformance and may present compelling opportunities for investors seeking higher returns.
What is your final message to investors looking at emerging markets in 2025?
The global economic outlook for 2025 presents a mix of challenges and opportunities for emerging markets like Nigeria. The country’s ability to navigate the transition to renewable energy, manage oil revenues, and continue implementing structural reforms will be crucial in sustaining long-term growth. Nigeria’s energy transition, for instance, presents both challenges and opportunities, including the potential to attract green financing while maintaining oil revenue. For investors, the focus should remain on identifying opportunities that strike the right balance between risk and reward. Sectors such as technology, renewable energy, and infrastructure are likely to be key drivers of growth. By embracing fiscal discipline, advancing structural reforms, and aligning with global sustainability goals, Nigeria and other emerging markets can lay the groundwork for resilient growth in 2025. At Standard Chartered, we emphasize personalised investment strategies that align with clients’ financial objectives. By maintaining a disciplined approach and identifying key growth sectors, investors can unlock the potential of emerging markets in the year ahead. Ultimately, the global economic environment presents both challenges and opportunities, and those investors who remain agile and focused on long-term goals will be best positioned to benefit from the growth prospects emerging in 2025.
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