Nigeria economy grew 3.87%
ABUJA — Nigeria’s economy expanded by 3.87 per cent in 2025, marking its strongest annual growth in recent years as reforms in the oil sector, stronger non-oil activities and improving macroeconomic stability supported economic recovery, according to the Central Bank of Nigeria (CBN).
The figure, contained in the CBN’s latest Macroeconomic Outlook and Monetary Policy reports, represents an improvement over the 3.38 per cent growth recorded in 2024 and reflects increasing resilience across agriculture, industry and services.
The Nigeria economy grew 3.87% despite persistent inflationary pressures, elevated interest rates and global economic uncertainty, underscoring the economy’s ability to sustain positive momentum during a period of significant structural reforms.
According to the CBN, continued improvements in crude oil production, stronger foreign exchange stability and expanding activities in key non-oil sectors contributed significantly to the country’s performance. The apex bank projects that the economy will grow even faster, at 4.49 per cent in 2026, if current reforms continue to yield results.
Growth driven by oil and non-oil sectors
The Nigeria economy grew 3.87% because both the oil and non-oil sectors contributed positively during the year.
Earlier quarterly reports from the CBN showed that economic activity strengthened steadily throughout 2025. In the second quarter, real GDP expanded by 4.23 per cent, supported by improved oil production, stronger manufacturing output and sustained expansion in information and communications technology, agriculture and services.
Oil production benefited from reforms aimed at increasing output, reducing crude oil theft and improving operational efficiency. Meanwhile, non-oil sectors such as telecommunications, financial services, trade, construction and agriculture continued to account for the largest share of national output.
The combination of these factors helped ensure that the Nigeria economy grew 3.87% despite domestic and external economic headwinds.
Services remained the largest contributor
The services sector continued to be the backbone of Nigeria’s economy.
Activities in banking, telecommunications, transport, trade and digital services maintained strong momentum throughout the year.
Agriculture also recorded improved performance following enhanced access to farm inputs, increased security in several food-producing areas and government interventions aimed at boosting productivity.
Industry likewise expanded, supported by manufacturing, mining and improved energy availability. The broader spread of growth across different sectors indicates that economic expansion was not driven solely by crude oil.
Official figures show that approximately 30 economic subsectors recorded growth above three per cent during the year, suggesting that the recovery became more diversified than in previous years.
Economy grows despite inflation
One of the remarkable aspects of the Nigeria economy grew 3.87% story is that it occurred during a period of elevated inflation and relatively tight monetary policy.
Throughout much of 2025, the Monetary Policy Committee maintained a restrictive policy stance to reduce inflationary pressure and stabilise the exchange rate.
Higher interest rates increased borrowing costs for businesses and households but were intended to moderate inflation, strengthen investor confidence and support exchange-rate stability.
Although these measures slowed credit expansion in some sectors, the CBN argues that improved macroeconomic stability ultimately supported broader economic recovery.
Reforms begin to influence economic performance
Economic reforms introduced over the past two years continued to influence the country’s performance.
Measures including foreign exchange reforms, fiscal adjustments, improved revenue mobilisation and reforms within the petroleum sector have gradually altered Nigeria’s macroeconomic environment.
The Federal Ministry of Finance noted that stronger foreign exchange liquidity, improved investor confidence and sector-specific reforms contributed to growth across agriculture, industry and services.
The fact that the Nigeria economy grew 3.87% suggests that some of these reforms are beginning to produce measurable improvements in output, although many households continue to face significant cost-of-living challenges.
Challenges remain despite growth
While GDP growth is encouraging, it does not automatically translate into improved living standards for every Nigerian.
Inflation remained one of the country’s biggest economic challenges throughout 2025, particularly food inflation.
Higher transport costs, elevated prices of basic commodities and exchange-rate adjustments continued to place pressure on household incomes.
Economic analysts therefore caution that sustained GDP growth must eventually translate into stronger job creation, lower inflation and higher real incomes if ordinary Nigerians are to experience tangible benefits.
Growth alone is insufficient unless accompanied by improvements in purchasing power and productivity.
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CBN projects stronger performance in 2026
Looking ahead, the CBN expects Nigeria’s economy to expand by 4.49 per cent in 2026.
The forecast is based on assumptions that oil production will improve further, foreign exchange conditions will remain relatively stable, inflation will moderate and structural reforms will continue.
The apex bank also expects continued expansion in manufacturing, agriculture, telecommunications and other non-oil sectors to sustain growth momentum.
If these projections materialise, the Nigeria economy grew 3.87% in 2025 could become the foundation for stronger medium-term economic performance.
Investors encouraged by improving indicators
Several macroeconomic indicators improved during the year.
Foreign reserves strengthened, current account balances remained positive and investor confidence gradually improved as exchange-rate volatility eased.
Although international uncertainties—including geopolitical tensions, commodity-price fluctuations and trade disruptions—continued to present risks, Nigeria’s domestic economy demonstrated greater resilience than many analysts had anticipated.
International financial institutions have also projected continued expansion, though they caution that inflation, poverty and unemployment remain major structural issues requiring sustained policy attention.
Importance of inclusive growth
Economists frequently distinguish between economic growth and inclusive economic development.
GDP measures the value of goods and services produced within the economy but does not directly measure income distribution, employment quality or poverty reduction.
Therefore, while the Nigeria economy grew 3.87%, policymakers face the challenge of ensuring that future growth creates broader opportunities for businesses, workers, farmers and young people.
Investment in infrastructure, education, healthcare, manufacturing, agriculture and technology will remain essential to sustaining long-term expansion.
Ogele News Analysis
Nigeria’s 3.87 per cent GDP growth represents an encouraging signal that recent macroeconomic reforms are beginning to stabilise the economy.
The improvement over 2024 reflects stronger contributions from both oil and non-oil sectors, particularly services, agriculture and manufacturing.
However, headline GDP growth should not obscure the reality that many Nigerians continue to struggle with high living costs and inflation.
The real measure of success will be whether sustained growth leads to lower unemployment, higher productivity, stronger household incomes and reduced poverty.
The CBN’s projection of 4.49 per cent growth in 2026 suggests optimism that current reforms will continue yielding results. Achieving that target, however, will depend on maintaining macroeconomic stability, improving security, expanding productive investment and ensuring that economic gains reach businesses and households across the country.
The fact that the Nigeria economy grew 3.87% provides evidence of economic resilience. The next challenge is ensuring that growth becomes faster, broader and more inclusive in the years ahead.
