Nigeria’s economy is projected to post stronger growth in the second quarter of 2025, with Gross Domestic Product (GDP) expected to expand between 3.2% and 3.9%, outpacing the 3.13% growth recorded in Q1. This positive outlook reflects a combination of reform gains, improving macroeconomic stability, and sustained expansion across the non-oil economy.
The National Bureau of Statistics (NBS) is expected to publish the official GDP figures later this month, but early indicators already point to a firmer growth trajectory for Africa’s largest economy.
Key Growth Drivers
1. GDP Rebasing Improves Economic Visibility
The recently completed GDP rebasing has provided sharper insight into Nigeria’s economic structure. The revision expanded the size of the economy to US $252 billion, capturing fast-growing sectors such as digital services, logistics, renewable energy, and creative industries. Analysts believe this will sharpen policy planning and investment flows.
2. Stable FX Environment Bolsters Confidence
The naira’s relative stability in Q2, supported by FX market unification and stronger reserves (above US $37 billion), has eased pressure on manufacturers and trade-dependent firms. Reduced volatility has also improved investor confidence, helping to attract portfolio inflows and sustain capital market momentum.
3. Non-Oil Momentum Powers Expansion
Services, telecoms, and finance remain the key growth engines. Bank recapitalisation and telecom tariff liberalisation have boosted activity, while the industry posted a modest rebound on the back of easing inflation and exchange-rate clarity. Agriculture, however, continues to underperform due to insecurity in food-producing regions and the added risks of 2025 flooding, which disrupted production in several states.
Reforms and Outlook
Nigeria’s reform agenda has provided tailwinds to growth. The removal of petrol subsidies, FX unification, and tighter fiscal controls have narrowed deficits and increased revenue mobilisation by over 4% of GDP in 2024. The World Bank credited these policies with improving macroeconomic credibility, while the Finance Minister has set an ambitious target of doubling GDP growth to 6% within two years.
Nonetheless, risks remain. Inflation, though moderating, is still high; debt service pressures persist; and fiscal projections remain vulnerable to oil price swings. Analysts caution that sustained structural reforms, power sector improvements, and effective policy execution will be vital to consolidate growth in the second half of 2025.
Overall, Nigeria enters the second half of 2025 with cautious optimism, its growth prospects reinforced by non-oil dynamism and reform gains, but tempered by persistent inflationary and structural challenges.
