Nigeria’s economic engine is roaring back to life, with GDP expanding by 3.7% in the first half of 2025—a performance powered by a strong rebound in crude oil production and improved business conditions across key sectors. This surge, revealed in the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) compiled by S&P Global, places Africa’s largest economy firmly on the path to recovery after a period of global uncertainty.
“The uptick in oil output has been the primary driver behind this robust economic expansion,” said Muyiwa Oni, Head of Equity Research, West Africa at Stanbic IBTC Bank.
Insights from monthly PMIs and crude oil production data from the Nigerian Upstream Petroleum Regulatory Commission indicate that the economy’s growth was not only fueled by higher crude oil output but also by improved performance in manufacturing and services, even as agriculture continues to lag behind its long-term average growth rate of 3.6%.
Business conditions have notably improved, with the World Bank reaffirming its projection that Nigeria’s economy will grow by 3.6% in 2025, up from 3.4% in 2024—despite global trade headwinds.
However, this is still below the Central Bank of Nigeria’s more optimistic estimate of 4.17% and the Nigerian Economic Summit Group’s ambitious 5.5% forecast made earlier in the year.
The oil sector’s recovery is especially significant, as Nigeria’s crude production had faced setbacks from security challenges and infrastructure issues.
Recent reforms and improved security in oil-producing regions have helped restore output, while the operationalisation of the Dangote Refinery is expected to further boost production and potentially transform Nigeria into a net exporter of refined petroleum products.
Inflation and Interest Rates: Signs of Stability
In addition to output gains, Nigeria’s macroeconomic environment is showing signs of stabilization. Inflation dropped to 22.97% in May 2025, with interest rates holding at 27.50%.
Analysts predict that with inflation expected to remain softer compared to the 2024 average, interest rates may be cut by 150–200 basis points in 2025 and by 200–250 basis points in 2026, offering further relief to businesses and consumers.
Quote of the Day
“This growth is not just a number; it’s a signal that Nigeria is on the right path to economic recovery,”
— Dr. Chinedu Okeke, Lagos-based economist
While the headline numbers inspire optimism, economists caution that growth per capita remains modest and may not be enough to significantly reduce extreme poverty. The non-oil sectors—services, trade, construction, and manufacturing—will need to sustain their momentum to ensure broad-based prosperity. Persistent challenges such as crude oil theft and underperformance in agriculture underscore the need for continued reforms and investment in security and infrastructure.
