Nigeria’s economy is showing increasing signs of macroeconomic stability as recent policy reforms support growth, although persistent structural challenges continue to pose risks to a sustained recovery.
According to the National Bureau of Statistics (NBS), Nigeria’s real gross domestic product (GDP) grew by 3.89% year-on-year in the first quarter of 2026, compared with 3.13% in the corresponding period of 2025. Growth, however, eased from 4.07% recorded in the fourth quarter of 2025, reflecting a moderation in economic activity.
The services sector remained the largest contributor to economic output, accounting for 57.73% of GDP during the quarter. Agriculture contributed 23.16%, while the manufacturing sector expanded by 3.29% in real terms, up from 1.69% a year earlier, supported by stronger output in petroleum refining, food and beverages, cement, chemicals and pharmaceutical manufacturing.
International financial institutions expect the economy to maintain moderate growth. The International Monetary Fund (IMF) projects Nigeria’s economy will expand by 4.1% in 2026, while the World Bank has also forecast growth of 4.1%, supported by ongoing macroeconomic reforms and improved economic fundamentals.
Business activity has remained resilient. According to the latest Stanbic IBTC Purchasing Managers’ Index (PMI), the headline index rose to 54.1 in May 2026 from 52.4 in April, marking the fourth consecutive month above the 50-point threshold that separates expansion from contraction in private-sector activity.
Despite the broader economic improvement, challenges persist in the oil sector. NBS data showed average crude oil production declined to 1.55 million barrels per day in the first quarter of 2026 from 1.62 million barrels per day in the same period of 2025. Nevertheless, the oil sector recorded 2.57% year-on-year real GDP growth, reflecting improved value addition despite lower production volumes.
External capital inflows strengthened considerably. NBS data showed total capital importation rose 83.83% year-on-year to $10.37 billion in the first quarter of 2026. However, the composition of inflows highlights a continuing structural weakness: portfolio investment accounted for 95.09% ($9.86 billion) of total inflows, while foreign direct investment (FDI) amounted to just $135.08 million, indicating that Nigeria continues to attract predominantly short-term capital rather than long-term productive investment.
Inflationary pressures remain a concern. According to the NBS, the headline inflation rate rose to 15.93% in May 2026 from 15.69% in April under the rebased Consumer Price Index (CPI), suggesting that price pressures have yet to ease fully despite tighter monetary policy.
Overall, recent macroeconomic reforms have helped restore a measure of investor confidence and improve key economic indicators. However, sustaining stronger and more inclusive growth will depend on attracting higher levels of long-term investment, improving productivity in agriculture and manufacturing, strengthening non-oil exports, maintaining fiscal discipline, and preserving price stability. Progress in these areas will be critical to accelerating job creation, reducing poverty and building a more resilient economy over the medium term.
