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World Bank has forecasted Nigeria’s economy to grow by 3.5% in 2025, with a slight improvement to 3.7% in 2026. This growth is expected to be driven by increased activity in the services sector and gradual improvements in macroeconomic stability.
These projections, outlined in the World Bank’s latest Global Economic Prospects report, point to a steady recovery despite ongoing domestic and global challenges.
Economic Growth in 2024
In 2024, Nigeria’s economy grew by an estimated 3.3%, primarily due to strong performance in the financial and telecommunications services sectors. The World Bank highlighted that macroeconomic and fiscal reforms implemented during the year boosted business confidence.
The report stated:
“In Nigeria, growth increased to an estimated 3.3% in 2024, mainly driven by services sector activity, particularly in financial and telecommunication services. Macroeconomic and fiscal reforms helped improve business confidence.”
The report also noted that the Central Bank of Nigeria tightened monetary policy to address rising inflation and a weak naira. Additionally, fiscal reforms, such as the elimination of the implicit foreign exchange subsidy and improved revenue administration, helped narrow the fiscal deficit.
Outlook for 2025 and 2026
The projected GDP growth for 2025 and 2026 reflects expectations of a rebound in consumption, supported by declining inflation due to the Central Bank’s monetary policy tightening.
The services sector is anticipated to remain the primary driver of growth, while oil production is expected to increase modestly but stay below Nigeria’s OPEC quota.
According to the report:
“Growth in Nigeria is forecast to strengthen to an average of 3.6% a year in 2025–26. Following monetary policy tightening in 2024, inflation is projected to gradually decline, boosting consumption and supporting growth in the services sector, which continues to be the main driver of growth.”
However, the World Bank warned that per capita income growth would likely remain weak over this period. Persistent challenges, including inflationary pressures, currency instability, and underperforming oil production, pose significant risks to sustained recovery. Rising debt-servicing costs and limited fiscal buffers further complicate the economic outlook.
Regional Context
Nigeria’s economic performance plays a vital role in shaping Sub-Saharan Africa’s growth trajectory. The region’s GDP growth is expected to accelerate from 3.2% in 2024 to 4.1% in 2025 and 4.3% in 2026, driven by strong domestic demand and improved trade prospects.
Growth in Nigeria and South Africa, the region’s largest economies, averaged 2.2% in 2024. This was attributed to improved electricity supply in South Africa and higher oil production in Nigeria.
The World Bank predicts Nigeria’s growth will average 3.6% annually between 2025 and 2026, driven by robust activity in the services sector and recovering domestic demand. However, inflationary pressures and exchange rate vulnerabilities remain significant concerns.
Key Insights
- Nigeria’s GDP grew by 3.46% year-on-year in real terms during Q3 2024, according to the National Bureau of Statistics (NBS).
- This marks an increase from the 2.54% growth recorded in Q3 2023 and an improvement from 3.19% in Q2 2024.
- The services sector, which expanded by 5.19% in Q3 2024, accounted for 53.58% of Nigeria’s aggregate GDP.
The growing significance of the services sector underscores its critical role in driving Nigeria’s overall economic growth.
