Nigeria posts strongest economic expansion in two years as reforms gain traction

NIGERIA’s economy gathered fresh momentum in 2025, delivering its fastest growth in two years as output strengthened across key sectors, particularly agriculture and industry. The improved performance comes at a time when policymakers are working to consolidate sweeping reforms aimed at stabilising and repositioning Africa’s most populous nation for sustained expansion.

Data released on Friday by the National Bureau of Statistics (NBS) shows that gross domestic product (GDP) grew by 4.07 percent year-on-year in the fourth quarter (Q4) of 2025. This compares with 3.76 percent recorded in the corresponding period of 2024. On a full-year basis, the economy expanded by 3.87 percent in 2025, up from 3.38 percent the previous year.

The latest figures represent Nigeria’s most robust annual performance since 2022 and signal a continuation of the country’s gradual recovery from the sharp downturn triggered by the COVID-19 pandemic. After contracting by 6.96 percent in 2020, GDP returned to positive territory with 0.95 percent growth in 2021. The rebound strengthened to 4.32 percent in 2022 before slowing to 3.04 percent in 2023. Growth has now accelerated for two straight years, underscoring a firmer recovery path.

The fourth-quarter expansion was supported by broad-based improvements across major segments of the economy. Agriculture, a critical employer and food supplier, grew by 4 percent in the quarter, a notable jump from 2.54 percent recorded a year earlier. The industrial sector also showed renewed strength, expanding by 3.88 percent compared with 2.49 percent in Q4 of 2024.

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Services, which remain the dominant driver of output, increased by 4.15 percent year-on-year. Although slightly lower than the 4.75 percent recorded in the same quarter of the previous year, the sector continued to anchor overall performance, accounting for 55.92 percent of total GDP. The services sector’s resilience reflects sustained activity in trade, telecommunications, finance, and real estate, even amid lingering macroeconomic headwinds.

In nominal terms, the size of the economy expanded sharply. GDP at basic prices rose by 17.55 percent to N122.8 trillion in the fourth quarter of 2025, up from N104.5 trillion in the corresponding period of 2024. The strong nominal growth reflects a combination of real output gains and elevated price levels over the past year.

Structure of the economy

A closer look at the structure of growth highlights familiar pillars. Crop production once again emerged as a leading contributor, alongside trade and real estate. Telecommunications and construction also featured prominently among the top-performing activities. Meanwhile, crude petroleum and natural gas accounted for just 2.87 percent of real GDP during the quarter, reinforcing the narrative that Nigeria’s economy is gradually diversifying away from its historical dependence on oil.

The improved economic outturn aligns with projections from major multilateral institutions. Both the World Bank and the International Monetary Fund (IMF) have forecast that Nigeria’s growth could accelerate to around 4.4 percent in 2026 and 2027. If realised, such expansion would represent the country’s fastest pace of growth in roughly a decade.

However, that outlook is contingent on several factors. Analysts say sustained reform implementation, higher oil production, exchange-rate stability, and a continued moderation in inflation will be critical to maintaining momentum. In recent years, Nigeria has grappled with persistent price pressures and sharp currency swings that have eroded household purchasing power and weighed on business confidence, even as headline GDP figures improved.

Signs of macroeconomic stabilisation have begun to emerge following sweeping policy changes introduced nearly three years ago. Authorities scrapped longstanding fuel subsidies and moved to liberalise the foreign exchange market, allowing the naira to trade more freely. Though initially disruptive and socially painful, the measures were designed to restore fiscal balance, improve transparency, and attract investment.

Recent data suggest some payoff from those reforms. Inflation has eased to about 15 percent, while the naira has recorded its first sustained gains in more than a decade. These shifts have helped restore a measure of confidence in financial markets and reduced some of the distortions that previously hampered economic planning.

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Yet, despite the improved macroeconomic indicators, many Nigerians continue to face acute cost-of-living pressures. More than half of the country’s estimated 230 million people live in extreme poverty, and unemployment and underemployment remain significant concerns. Economists argue that while growth is strengthening, it remains insufficient to deliver broad-based prosperity.

Experts maintain that achieving such rates will require deeper structural reforms, enhanced productivity in agriculture and manufacturing, improved infrastructure, and stronger human capital development. For now, the latest data provide evidence that Nigeria’s economy is regaining traction. The challenge ahead lies in converting cyclical recovery into durable, inclusive expansion capable of lifting millions out of poverty.