These projections, outlined in the World Bank's recent Global Economic Prospects report, indicate a steady yet modest recovery for Nigeria amid persistent domestic and global challenges.
In 2024, Nigeria's growth is anticipated to rise to approximately 3.3%, largely driven by robust performance in the services sector, particularly in financial and telecommunications services.
The World Bank highlighted that the macroeconomic and fiscal reforms enacted in 2024 have contributed to improved business confidence.
Its report read, “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.
“In response to rising inflation and a weak naira, the central bank tightened monetary policy. Meanwhile, the fiscal deficit narrowed due to a surge in revenues driven by the elimination of the implicit foreign exchange subsidy, following the unification of the exchange rate and improved revenue administration.”
Economic Drivers and Challenges
The anticipated growth for 2025 and 2026 reflects a projected rebound in consumption, aided by a gradual decrease in inflation following the Central Bank of Nigeria's monetary policy tightening in 2024.
The services sector is expected to continue as the primary engine of growth, while oil production is forecasted to see modest increases, although it will still fall short of the country's OPEC quota.
According to the report, “Growth in Nigeria is expected to strengthen to an average of 3.6% annually in 2025-26.”
Following the monetary policy adjustments in 2024, inflation is expected to decline gradually, which will enhance consumption and bolster growth in the services sector, the main contributor to economic expansion.
While oil production is projected to rise during the forecast period, it will remain below the OPEC quota.
The baseline forecast suggests that growth in per capita income will likely remain subdued throughout the forecast period.
Despite these encouraging trends, the World Bank cautioned that per capita income growth is expected to stay weak over the forecast horizon.
The ongoing presence of structural challenges, such as inflationary pressures, a depreciating naira, and suboptimal oil production, presents considerable risks to Nigeria's economic recovery. Additionally, escalating debt-servicing costs and constrained fiscal resources further complicate the nation's economic outlook.
On a regional scale, Nigeria's economic performance is vital to the overall trajectory of Sub-Saharan Africa. Growth in the region is anticipated to rise from 3.2% in 2024 to 4.1% in 2025 and 4.3% in 2026, fueled by strong domestic demand and enhanced trade opportunities.
The two largest economies in the region, Nigeria and South Africa, are projected to achieve an average growth rate of 2.2% in 2024, supported by improved electricity supply in South Africa and increased oil production in Nigeria.
The World Bank forecasts that Nigeria's growth will strengthen to an average of 3.6% annually in 2025-26, bolstered by vigorous activity in the services sector and a rebound in domestic demand. However, ongoing macroeconomic challenges, including inflation and exchange rate vulnerabilities, are likely to continue impacting economic performance.
Recent reports indicate that Nigeria's Gross Domestic Product (GDP) experienced a year-on-year growth of 3.46% in real terms during the third quarter of 2024, as per the latest data from the National Bureau of Statistics (NBS). This represents a significant increase from the 2.54% growth recorded in the same period of 2023 and an improvement from the 3.19% growth noted in the second quarter of 2024.
The growth in Q3 2024 was largely driven by the Services sector, which grew by 5.19% and constituted 53.58% of the total GDP. This underscores the sector's increasing significance in Nigeria's economic framework, as its expansion often correlates with overall economic growth.