By Chinwendu Obienyi
Nigeria’s economy is expected to grow by as much as 4.2 per cent by the end of the year, buoyed by improved crude oil production, stronger business sentiment, and a gradual recovery from the economic shocks triggered by recent reforms, the latest report from Stanbic IBTC Bank revealed on Wednesday.
The estimate is based on insights from the bank’s Purchasing Managers’ Index (PMI) and crude oil production data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), signaling a strengthening of Africa’s largest economy following what has been a turbulent period for households and businesses alike.
“Insights from the monthly PMIs and crude oil production data from the NUPRC suggest an economy that grew by an estimated 3.7 per cent year-on-year in the first half of 2025 (H1:25),” the report stated.
The bank attributed the improvement to a recovery in oil output, Nigeria’s top export commodity and renewed growth momentum in the manufacturing and services sectors which had previously suffered under tight monetary conditions and rising operating costs.
However, the agricultural sector continues to struggle, largely due to persistent insecurity in major food-producing regions and erratic climate conditions, the report added.
The 3.7 per cent growth estimate for H1:25 puts the country on track for a full-year real GDP growth of 3.5 per cent. But with a GDP rebasing exercise on the horizon, Stanbic IBTC forecasts that Nigeria’s effective growth rate could rise to 4.2 per cent annually—higher than official projections.
The economic recovery comes after a challenging 2023 and early 2024 period, during which the government of President Bola Tinubu implemented sweeping reforms, including the removal of fuel subsidies and the unification of the naira exchange rate. While aimed at long-term fiscal sustainability, the reforms triggered a severe cost-of-living crisis and contributed to record inflation.
The Central Bank of Nigeria (CBN) responded with aggressive monetary tightening, pushing the benchmark Monetary Policy Rate (MPR) to a record 27.5 per cent in a bid to rein in inflation.
However, with inflation now showing signs of easing, analysts expect a shift in policy direction.
Head, Equity Research at Stanbic IBTC, Muyiwa Oni, said, “Given that inflation is expected to remain softer compared to the 2024 average, interest rates are likely to be lower this year and next.
“We expect a 150–200 basis point rate cut in 2025 and a further 200–250 basis points cut in 2026.”
Oni added that the combination of structural reforms, the removal of protectionist policies, and the subsiding impact of past reform shocks would help support Nigeria’s medium-term growth outlook.
The World Bank shares a similar view, forecasting that Nigeria’s economy will grow by 3.6 per cent in 2025 and up to 3.8 per cent between 2026 and 2027, even amid global economic uncertainties.
As the oil sector stabilizes and non-oil activities pick up pace, analysts believe Nigeria may finally be entering a phase of more sustainable, broad-based growth, provided that reform momentum continues and security challenges are addressed.