Nigeria’s economy showed moderate growth in the first half of 2025, expanding by an estimated 3.7% year-on-year, thanks to better business conditions and rising crude oil output. This insight comes from the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) report, compiled by S&P Global and released on Tuesday.
Economic Growth on Track, But Below Government Targets
The growth estimate closely aligns with the World Bank’s forecast of 3.6% for 2025, slightly above the 3.4% recorded in 2024. However, this falls short of the more ambitious 4.17% growth projection by the Central Bank of Nigeria (CBN) and the 5.5% target announced by the Nigerian Economic Summit Group earlier this year.
“PMI data and crude oil production figures suggest real GDP growth of about 3.7% y/y for H1 2025,” said Muyiwa Oni, Head of Equity Research for West Africa at Stanbic IBTC Bank. “This was supported by higher oil output and better performance in manufacturing and services, though agriculture remains below its long-term average of 3.6%.”
Inflation & Interest Rate Outlook
According to Oni, inflation is expected to ease slightly this year, which could prompt a reduction in interest rates.
“We anticipate a rate cut of 150–200 basis points in 2025, and an additional 200–250 bps cut in 2026, depending on inflation trends,” he noted.
Lower inflation, combined with structural reforms and the phasing out of older government policies, should improve medium-term economic prospects.
GDP Rebasing Could Boost Growth Figures
While the bank maintains a 3.5% growth forecast for 2025, Oni added that upcoming GDP rebasing could raise that figure to 4.2%, reflecting broader economic activity.
June PMI Signals Continued Growth, Slower Pace
The June 2025 PMI reading came in at 51.6, indicating that business conditions are still expanding—but at a slower pace compared to previous months. It marks the seventh consecutive month of expansion, though momentum has eased since March.
- May PMI: 52.7
- June PMI: 51.6
- 2025 Average: 53.1
The slowdown is mainly attributed to weaker manufacturing output, while other sectors—like services and retail—continued to grow steadily.
What Businesses Are Saying
The PMI survey highlighted solid growth in new orders and customer acquisition, but also noted some headwinds:
- Material shortages, delayed payments, and power supply issues are causing rising backlogs.
- Employment levels were stable in June, recovering slightly from a dip in May.
- Supplier delivery times remained mostly unchanged, though some delays were caused by poor road infrastructure.
Despite these challenges, business confidence hit its highest point since August 2022, driven by expansion plans and infrastructure investments.
About the PMI Report
The Stanbic IBTC Bank Nigeria PMI is based on feedback from around 400 private-sector firms across industries like agriculture, mining, construction, manufacturing, wholesale, retail, and services. The data offers a snapshot of economic trends and has been compiled since January 2014.
Summary
| Indicator | Status (H1 2025) |
|---|---|
| GDP Growth Estimate | 3.7% (year-on-year) |
| June PMI | 51.6 (Expansion, slowing pace) |
| Key Drivers | Oil production, services, manufacturing |
| Challenges | Inflation, infrastructure, agriculture |
| Business Confidence | Highest since August 2022 |
In short: Nigeria’s economy is growing steady but cautious. With easing inflation and potential interest rate cuts ahead, the focus now shifts to structural reforms and post-rebasing momentum.
