Nigeria’s economy may be enjoying a boost from rising crude oil production and stronger government revenues, but the Organisation of the Petroleum Exporting Countries (OPEC) has cautioned that stubborn inflation and high interest rates could still derail the country’s recovery momentum. In its July Monthly Oil Market Report, OPEC acknowledged the progress made through economic reforms and improved oil output but stressed that controlling inflation and maintaining exchange rate stability remain essential for sustainable growth.
According to the report, Nigeria’s Gross Domestic Product (GDP) expanded by 3.9 per cent in the first quarter of 2026, only slightly below the 4.0 per cent growth recorded in the final quarter of 2025. The oil-producing bloc noted that increased crude production has significantly improved government revenues, strengthened foreign exchange earnings and boosted external reserves, providing much-needed support for the country’s fiscal position.
Beyond oil, OPEC highlighted the resilience of Nigeria’s non-oil sector, which continues to drive economic expansion. Key industries including agriculture, manufacturing, construction, trade, finance and insurance posted encouraging performances, reflecting growing business confidence. The report also pointed to the Stanbic IBTC Purchasing Managers’ Index (PMI), which stood at 53.4 in June, indicating continued business expansion despite a challenging economic environment.
OPEC further noted that Nigeria’s growing domestic refining capacity, particularly through the Dangote Refinery, could deliver significant economic benefits. Increased local refining is expected to improve fuel availability, reduce dependence on imported petroleum products and ease pressure on foreign exchange demand. These developments could strengthen energy security and support broader economic stability in the coming months.
Despite these positive indicators, OPEC warned that inflation remains a major threat to Nigeria’s recovery. Consumer prices rose to 15.9 per cent in May, largely driven by rising food costs that continue to squeeze household budgets. The organisation cautioned that persistent inflation may force the Central Bank of Nigeria (CBN) to maintain high interest rates, keeping borrowing costs elevated for businesses and consumers. While Nigeria’s outlook remains positive, OPEC emphasized that bringing down inflation and making credit more affordable will be crucial to sustaining economic growth and protecting the gains achieved through rising oil production and ongoing reforms.
source: The sun
