Economic growth accelerates in the second quarter of 2025

GDP growth hits four-year high: Nigeria's GDP grew 4.2% in annual terms in Q2, following a 3.1% rise in the previous quarter. The reading marked the best result in four years, and exceeded market expectations.

Oil boom drives acceleration: The pickup was spearheaded by the oil sector, which surged 20.5% on a year-on-year basis in Q2, following a mild 1.9% expansion in the previous quarter; crude oil production growth accelerated to its highest level since Q2 2020. Relative to the previous quarter's data, the reading for the industrial sector as a whole improved in Q2 (+7.5% yoy vs +3.4% in Q1). Additionally, non-oil sector GDP grew 3.6% on a year-on-year basis in Q2, following 3.2% growth in the previous quarter. The reading for the agricultural sector also improved in Q2 (+2.8% vs +0.1% in Q1). Conversely, the reading for the services sector worsened in Q2 (+3.9% vs +4.3% in Q1).

Economic momentum to soften ahead: GDP growth is expected to ease in Q3 before largely stabilizing through the end of next year, barring a temporary dip in Q4. Tight financing conditions will weigh on momentum. That said, stronger private spending and fixed investment should keep growth rates strong by historical standards. Moreover, increased oil output and a ramp-up of diesel and gasoline output at the Dangote refinery will support net exports. Still, U.S. tariffs could indirectly weigh on oil demand, threatening the GDP growth outlook.

Panelist insight: On the growth outlook, analysts at Oxford Economics commented: “Although the Nigerian economy performed well in H1 2025, we think real GDP growth will slow in the second half of the year as the full impact of President Trump's tariffs becomes evident. Nigeria remains relatively shielded from the tariff barrage, given the exemption of oil, which lowers the effective tariff rate. Still, the second-order effects via oil price compression and a potential slowdown in oil demand remain uncertain.”

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