Nigeria’s Economy Grows 3.7% in First Half of 2025 Amid Oil Boost and Business Expansion

Nigeria’s economy experienced a 3.7% year-on-year growth in the first half of 2025, according to the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) report by S&P Global. This growth was driven by stronger oil production, improved business conditions, and increased output in manufacturing and services. While agriculture lagged behind its long-term average, the overall economic expansion reflected a positive trajectory for the country’s recovery and resilience.

The report aligns with various forecasts, including a 3.6% growth prediction by the World Bank, which is slightly below the Central Bank of Nigeria’s 4.17% estimate and the Nigerian Economic Summit Group’s ambitious 5.5% target. Stanbic’s own forecast sees full-year growth settling around 3.5%, consistent with performance seen in the first half. Analyst Muyiwa Oni emphasized that oil output and improvements in key sectors were the primary contributors to the gains, while agriculture remained a weak spot.

On monetary policy, Oni projected that with inflation likely to remain lower than 2024 levels, interest rates could also decline. Stanbic IBTC anticipates a rate cut of 150–200 basis points in 2025 and a further 200–250 bps in 2026. Structural reforms, the removal of protectionist policies, and diminishing impacts of earlier government interventions are expected to sustain medium-term economic momentum.

The June PMI revealed that business conditions remained expansionary for the seventh consecutive month, although the pace slowed slightly. The index dropped to 51.6 points from May’s 52.7, marking the third straight month of deceleration. This trend was largely attributed to a slump in manufacturing output, even though other sectors continued to post growth on the back of increased new orders and customer acquisitions.

Despite challenges such as material shortages, delayed payments, and inconsistent power supply, business sentiment was the most optimistic since August 2022. Employment levels stabilized after a minor dip in May, while backlogs grew due to persistent supply-side issues. Supplier delivery times remained largely unchanged, with poor infrastructure cited as a continued bottleneck. The PMI, based on input from 400 private-sector firms, reflects activity across agriculture, mining, manufacturing, construction, retail, and services.

Source: Punch