Nigeria’s economy has recorded a 3.7 percent year-on-year growth in the first half of 2025, buoyed by increased crude oil production and improved business activity in key sectors, according to the latest Stanbic IBTC Bank Purchasing Managers’ Index (PMI) report released on Tuesday.
The report, compiled by S&P Global, offers encouraging signs for the economy amid persistent inflationary pressure and global economic uncertainties. Analysts say this performance places Nigeria on a strong trajectory to meet or exceed full-year growth targets.
Muyiwa Oni, Head of Equity Research, West Africa, at Stanbic IBTC Bank, said the 3.7% estimated GDP growth for H1 2025 aligns closely with the bank’s full-year forecast of 3.5%.
“Insights from monthly PMI data and oil production records from the Nigerian Upstream Petroleum Regulatory Commission suggest an economy that grew by 3.7 percent year-on-year in H1 2025,” Oni said. “This was driven largely by increased crude oil output, and improved growth in manufacturing and services, while agriculture continues to underperform compared to its long-term average growth of 3.6%.”
Nigeria’s oil sector was a key contributor to the economic rebound, bolstered by increased production efficiency and easing pipeline disruptions. After years of underperformance due to oil theft and infrastructure decay, the sector’s improved output has had a positive ripple effect on foreign exchange earnings and fiscal revenues.
Despite a previous forecast by the Nigerian Economic Summit Group (NESG) suggesting a bullish 5.5% growth in 2025, the new PMI-backed estimate and World Bank’s more conservative 3.6% projection offer a balanced outlook. The Central Bank of Nigeria (CBN), meanwhile, had projected a 4.17% growth rate for the year, signaling continued divergence among economic analysts.
In May 2025, Nigeria’s headline inflation eased to 22.97%, reflecting marginal relief for households and businesses. Coupled with a Monetary Policy Rate (MPR) that currently stands at 27.5%, there are growing expectations for interest rate cuts in the coming months.
Oni noted, “With inflation expected to be softer than the 2024 average, we anticipate a 150 to 200 basis points rate cut in 2025, and potentially a 200 to 250 basis points reduction in 2026. This would support credit growth and stimulate private sector expansion.”
Beyond oil, the manufacturing and services sectors continued to recover strongly in the first half of 2025. Positive PMI readings point to increased production levels, rising new orders, and improved supplier delivery times—critical indicators of a more resilient economic environment.
However, the agricultural sector lagged behind, highlighting structural weaknesses and the impact of persistent insecurity in food-producing regions. Analysts say without targeted investment and reforms in agribusiness, the sector may continue to drag on overall GDP performance.
In parallel with economic growth, the naira showed renewed strength against the U.S. dollar at the official foreign exchange window, beginning July on a positive note. Improved forex inflow from oil sales, as well as reforms in the FX market, have contributed to easing pressure on the national currency.
The uptick in investor confidence has also led to increased participation in both equities and fixed income markets, with analysts urging continued reforms in fiscal policy, infrastructure, and energy pricing to sustain momentum.
Looking ahead, the economic outlook for H2 2025 will depend largely on macroeconomic stability, policy consistency, and ongoing structural reforms. The Stanbic IBTC report recommends targeted fiscal interventions to stimulate rural economies and build on the gains in services and oil.
“The key challenge will be sustaining growth amid global headwinds and internal vulnerabilities,” Oni concluded. “Continued improvement in oil production, infrastructure, and policy execution will be vital to unlocking Nigeria’s full economic potential.”