Nigeria’s growth rate to hit 4.2% amid improved oil output, business conditions –Report

Nigeria’s economic growth is projected to reach 4.2% in 2025, buoyed by rising crude oil output, improved business confidence, and gradual recovery from the economic disruptions caused by recent structural reforms. This projection, outlined in a new report by Stanbic IBTC Bank, draws on data from the bank’s Purchasing Managers’ Index (PMI) and oil production figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The report estimates a 3.7% year-on-year GDP growth for the first half of 2025.

The report attributes the upswing primarily to the rebound in oil production—Nigeria’s main export—and a resurgence in manufacturing and services sectors. These sectors had previously been hindered by high borrowing costs and inflation. However, the agricultural sector remains a weak point due to insecurity in key food-producing areas and adverse weather conditions affecting yields and food supply.

Stanbic IBTC anticipates that Nigeria’s full-year real GDP growth will hit 3.5%, but with a forthcoming GDP rebasing, the adjusted growth rate could climb as high as 4.2%, surpassing earlier official projections. This would mark a significant improvement after a turbulent 2023 and early 2024, which were dominated by President Bola Tinubu’s economic reforms, including fuel subsidy removal and exchange rate unification, which triggered inflation and economic strain on citizens.

In response to the inflation surge, the Central Bank of Nigeria (CBN) adopted a strict monetary tightening policy, raising the benchmark interest rate to 27.5%. But with inflation beginning to ease, analysts now expect interest rates to gradually decline. Stanbic’s Head of Equity Research, Muyiwa Oni, predicts a 150–200 basis point rate cut in 2025 and further reductions in 2026, as inflationary pressure softens.

The outlook is cautiously optimistic, with analysts emphasizing that continued reform implementation and improved security conditions are vital to sustaining long-term growth. The World Bank echoes this sentiment, projecting Nigeria’s growth at 3.6% in 2025 and up to 3.8% by 2027. A stabilized oil sector and expanding non-oil industries may signal the beginning of more inclusive, resilient economic growth if key structural challenges are addressed.

Source: The Sun