Nigerian economy in Q2 GDP moving towards stronger recovery – CPPE

Nigeria’s economy strengthened its recovery momentum in the second quarter of 2025, with real GDP expanding by 4.23% year-on-year. This represents a notable acceleration from 3.13% in Q1 and a stronger performance compared to 3.48% in Q2 2024. The data confirms that the economy is not only on a recovery trajectory but is also gaining traction, despite lingering structural and macroeconomic challenges.

Dr Muda Yusuf, Chief Executive Officer, Centre For The Promotion Of Private Enterprise [CPPE] in a statement presented a policy brief on Nigeria’s 2025 Second Quarter GDP Report to Gentechnews

Sectoral Performance Review

Oil and Gas Sector – The Growth Engine

The oil and gas sector was the undisputed driver of Q2 growth, recording a dramatic 20.46% expansion, up from just 1.87% in Q1. This surge is the sector’s best performance in years and reflects three powerful dynamics:

• Policy Reforms: Incentives for deep offshore exploration, gas commercialization, and investor-friendly regulations are yielding results.
• Governance Overhaul: The leadership reset at NNPC appears to have delivered operational efficiency, improved transparency, and production gains.
• Market Tailwinds: Oil prices held relatively stable, while global demand remained firm—creating a favorable backdrop for Nigerian producers.

Yet, despite this exceptional growth, the oil sector’s share of GDP remains 4.05%, underscoring the need for Nigeria to rely on non-oil sectors for inclusive and broad-based economic transformation.

Agriculture – Gradual Rebound

Agriculture posted a 2.82% growth rate, a significant leap from 0.07% in Q1. This improvement reflects the impact of government input support programs, better rainfall patterns, and subnational agricultural interventions.
However, agriculture still faces serious productivity constraints: poor rural infrastructure, low mechanization, weak access to finance, and security challenges that disrupt farming activities. Without addressing these, the sector’s potential for food security, employment, and raw material supply will remain under-realized.

Manufacturing and Industry – Mixed Fortunes

Manufacturing slowed slightly to 1.60%, highlighting the continued pressure of high production costs, logistics inefficiencies, FX volatility, and competition from cheaper imports.

Within industry, however, there were bright spots:

• Oil Refining: Output jumped from 11.5% to 15.78%, signaling progress in domestic refining capacity and import substitution.
• Construction: Growth moderated to 5.25%, suggesting slower execution of infrastructure projects—likely due to delayed budget implementation and funding bottlenecks.

Transport and Aviation – A Strong Bounce-Back

Air transport turned a corner in Q2, growing 6.34% after contracting 0.81% in Q1. This rebound signals renewed investor and consumer confidence, thanks to sector reforms, improved safety oversight, and rising demand for air travel.

Services Sector – Still the Dominant Force

Services remain the backbone of Nigeria’s economy, contributing 56.53% of GDP. Performance was mixed across key subsectors:

• ICT: Growth eased to 6.60%, but the sector continues to be a vital driver of innovation, digital transformation, and productivity.
• Trade: Slowed to 1.29%, weighed down by weak consumer spending power and supply chain challenges.
• Real Estate: Softened to 3.79%, reflecting affordability constraints and regulatory tightening linked to anti-money-laundering efforts.
• Financial Services: Remained robust, expanding 16.18% compared to 15.91% in Q1, buoyed by improved government revenue flows, higher transaction volumes, and greater financial intermediation.

Challenged and Recessionary Sectors

Some sectors remain under severe strain:

• Textile & Apparel: Contracted 1.32%, continuing a multi-year slump driven by smuggling, energy costs, and infrastructure deficits.
• Motor Vehicle Assembly: Reversed Q1 gains to contract 1.5%, reflecting import pressure and weak demand. Sustained policy support, including government procurement of locally assembled vehicles, is essential for revival.

Emerging Recovery Signals

Notable green shoots emerged:

• Livestock Production: Grew 1.64%, recovering from a sharp 16.69% contraction in Q1, aided by the establishment of a dedicated livestock ministry and targeted support programs.
• Coal Mining: Posted a remarkable 57.53% growth, reversing a 22.28% Q1 decline, signaling renewed investment and demand in the subsector.

Economic Structure – A Familiar Pattern

The structure of output remains broadly unchanged:

• Agriculture: 26.17%
• Industry: 17.13%
• Services: 56.53%

Non-oil GDP grew 3.64%, confirming that non-oil activity remains the mainstay of the economy, even as oil sector performance significantly lifted headline growth.

Policy Implications and Outlook

Q2 2025 represents one of Nigeria’s strongest quarterly growth performances in recent years. However, sustaining and deepening this momentum requires urgent structural interventions:

• Reduce energy and logistics costs to improve competitiveness of manufacturers and agro-processors.
• Accelerate infrastructure investment to unlock value chains in agriculture and industry.
• Expand affordable credit access for MSMEs and farmers to boost production.
• Promote local content and import substitution to strengthen domestic capacity and reduce vulnerability to external shocks.
• Enhance policy consistency and investment climate to sustain private sector confidence and attract long-term capital.

Conclusion

Q2 2025 is a clear statement that Nigeria’s economy is moving beyond stabilization toward a stronger recovery. But to translate this growth into jobs, poverty reduction, and shared prosperity, the focus must shift to unlocking productivity in agriculture, manufacturing, construction, real estate and trade—the sectors that touch the lives of most Nigerians.

With consistent reform execution, improved governance, and private sector collaboration, Nigeria can transform its present growth momentum into a more resilient, inclusive, and job-rich economy.