The recent GDP report published by the Nigerian Bureau of Statistics (NBS) showed that Nigeria’s economy rose by 3.98% y/y in Q3-25, easing from the 4.23% y/y recorded in Q2-25.
The outturn was primarily driven by robust growth in the non-oil sector, reflecting higher expansion in the agricultural (+3.79% y/y vs Q2-25: +2.82% y/y) and services (+4.15% y/y vs Q2-25: +3.94% y/y) sectors, while growth in the manufacturing sector (+1.25% y/y vs Q2-25:+1.60% y/y) pared.
Conversely, the oil sector (+5.84% y/y vs Q2-25: +20.46 % y/y) recorded softer growth, underpinned by weaker crude oil production during the period. The non-oil sector’s contribution to GDP increased to 96.56% (Q2-25: 95.95%), while the oil sector accounted for 3.44% of total GDP (Q2-25: 4.05%).
Oil Sector Growth Eases on Softer Oil Production
GDP growth in the oil sector eased markedly to 5.84% y/y in Q3-25 (Q2-25: +20.46% y/y), primarily due to lower growth in crude oil production in Q3-25. Notably, crude oil production averaged 1.64 mb/d (Q2-25: 1.68 mb/d), according to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), representing a 5.8% y/y increase, compared with 14.3% y/y in Q2-25.
The milder rise in crude output reflects the impact of PENGASSAN’s industrial action and planned turnaround maintenance at major oil facilities during the period. Nonetheless, enhanced security measures and improved oil investments are keeping crude oil production above the previous year’s level.
During the period, crude oil production increased across the Bonny (+23.5% y/y), Qua Iboe (+52.9% y/y), Brass (+25.0% y/y) and Forcados (+6.5% y/y) terminals, while it declined at the Odudu (-20.5% y/y) and Okwuibome (-5.2% y/y) terminals.
Non-oil Sector Sustains Gains, Hitting 3.90% y/y in Q3-25
The non-oil sector growth sustained its recovery, increasing to 3.91% y/y from 3.64% y/y in Q2-25. We believe the robust growth generally reflects improved business confidence driven by a more supportive macroeconomic environment, including reduced price pressures and naira stability.
Looking more closely, the agriculture (+3.79% y/y vs Q2-25: +2.82% y/y) and services (+4.15% y/y vs Q2-25: +3.94% y/y) sectors expanded, while the manufacturing (+1.25% y/y vs Q2-25: +1.60% y/y) sector growth slowed.
Services: In the services sector, growth in key activities such as trade (+1.98% y/y vs Q2-25: +1.29% y/y) and finance & insurance (+19.63% y/y vs Q2-25: +16.13% y/y) notched higher. Nonetheless, the real estate (+3.50% y/y vs Q2-25: +3.79% y/y), ICT (+5.78% y/y vs +6.61% y/y), and transportation (+9.87% y/y vs Q2-25: +22.09% y/y) subsectors grew at a slower pace.
We judge that the trade subsector’s rebound was supported by a modest recovery in consumption and easing price pressures. Moreso, higher exports of refined petroleum products likely reinforced growth in trade output. At the same time, financial institutions continued to benefit from the elevated interest rate environment, boosting net interest income.
Additionally, we believe the growing demand for insurance services, driven by greater risk awareness, regulatory efforts to raise penetration, and the rollout of compulsory schemes, is supporting solid expansion in the insurance (+20.78% y/y vs Q2-25: +15.70% y/y) subsector.
Conversely, we note that rising internet usage and easing input cost pressures are driving activity in the ICT subsector, but we judge that growth in active telephony and internet subscribers remains too weak to lift overall sector growth materially. Concurrently, high financing costs and constrained disposable incomes are weighing on real estate activity.
Meanwhile, we believe heightened insecurity and insurgency risks likely contributed to slower transportation growth, as reflected in the marked fall in road transportation output growth (+10.13% y/y vs Q2-25: +24.50% y/y).
Agriculture: The agriculture sector (+3.79% y/y vs Q2-25: +2.82% y/y) unexpectedly expanded, marking its highest growth print since Q1-22 (+4.82% y/y) despite the lean season (June to mid-September). For crop production (+3.90 y/y vs Q2-25: +3.32% y/y), we assess that the stronger outturn may have been driven by early maturing crops and residual output from dry season (or irrigation) farming. In addition, the robust expansion likely reflects the effect of the low base from Q3-24, when heightened flooding and cost pressures disrupted production severely, amplifying the comparison and contributing to the stronger reported growth. Livestock (+3.90% y/y vs Q2-25: +1.64% y/y) and forestry (+4.69% y/y vs Q2-25: +1.66% y/y) output also increased during the period, reflecting improved supply due to softer price pressures and better access to forest resources, respectively. On the other hand, weak infrastructure and limited access to finance are limiting output in the fishing subsector (+1.58% y/y vs Q2-25: +2.57% y/y).
Manufacturing: Although easing cost pressures and a more stable naira are gradually supporting a recovery in the manufacturing sector, subdued consumer demand and slower credit growth continue to cap overall expansion.
Meanwhile, weak construction activity continues to weigh on growth in the cement industry. Within the sector, growth in the food, beverage & tobacco (+1.97% y/y vs Q2-25: +2.15% y/y) and cement (+4.68% y/y vs Q2-25: +4.86% y/y) subsectors moderated, while the oil refining subsector (+15.78% y/y vs Q2-25: +11.51% y/y) maintained its strong momentum on the back of higher refined petroleum output.
Conversely, the textile, apparel and footwear (-2.41% y/y vs Q2-25: -1.32% y/y) subsector extended its contraction despite being the second largest segment within manufacturing, reflecting persistent economic and structural challenges, including elevated input costs, weak domestic demand, competition from cheaper imports, and recurrent power supply disruptions.
Q4-25 GDP Outlook – Robust Growth in Sight
Oil GDP: In Q4-25, we expect oil output to firm as facilities returning from earlier scheduled maintenance ramp up to higher utilisation, while operators pursue a catch up strategy to recover volumes lost to outages. In addition, recent field reactivations and new production streams, such as the Ibom Field start up and revived wells by key operators, should further lift available barrels.
Together, the return of assets to service, incremental new supply, and deliberate efforts to offset prior shortfalls are likely to support higher liftings and a noticeable increase in overall quarterly output. Consequently, we forecast crude oil production to average 1.66 mb/d in Q4-25. However, a high base (Q4-24: 1.63 mb/d) is expected to limit oil GDP growth. Specifically, we forecast the oil sector to grow by a mild 0.03% y/y in Q4-25.
Non-Oil GDP: Economic activities in the non-oil sector are set to strengthen as we approach the festive period in Q4-25. We expect to see a tick up in consumer spending as households increase discretionary purchases for celebrations, travel, hospitality and year end social events. Key sectors such as trade, agriculture, manufacturing, and transportation are expected to benefit from these. Nonetheless, insecurity remains a major downside risk to growth. Accordingly, we forecast the non-oil sector GDP to advance by 4.12% y/y in Q4-25 (Q3-25: +3.91% y/y).
Agriculture: The agricultural sector is forecast to expand by c.4.0% y/y (Q3-25: 3.79% y/y), reflecting higher output in crop production and livestock farming, primarily driven by the main harvest period and improved consumer demand fueled by festive celebrations. A low base effect is also expected to contribute to the acceleration in growth.
Services: We anticipate growth in the services sector (+4.58% y/y vs Q3-25: +4.15% y/y) to increase, buoyed by expansion in trade, ICT, and the finance and insurance sectors. Nonetheless, growth in the real estate and transportation sectors is likely to remain subdued. Specifically, increased household spending and naira appreciation will likely enhance growth in the trade sector. Stronger economic activities in Q4-25, driven by seasonal consumer spending, a surge in e-commerce and mobile money transactions, increased corporate ICT procurement and government digital payments ahead of year end, may contribute to higher expansion in the ICT sector relative to the previous quarter.
However, a mild growth in telephony and internet subscribers may likely continue to limit expansion compared to the same period in 2024. For the finance and insurance sector, the MPC’s gradual pivot to monetary easing and better economic conditions may encourage risk asset creation by financial institutions amid still elevated interest rates. The real estate sector may likely maintain lukewarm growth due to persistently elevated construction and finance costs as well as still weak demand due to constrained disposable income. While transportation and logistics activities are set to increase, heightened insecurity and terrorism threats will likely continue to hamper growth, particularly in the road and rail transportation subsector.
Manufacturing: The food, beverage, and tobacco industry, the largest sector in manufacturing, is set to benefit from yuletide and holiday spending driving overall expansion. The textile, apparel and footwear industry will remain in the negative territory; however, improved demand may slow the pace of contraction. Cement demand may pick up as construction and renovation activity intensifies ahead of year-end and as government and private infrastructure projects accelerate, supporting higher local demand. The oil refining segment will maintain positive growth as production continues to expand. Therefore, we project the manufacturing sector to expand by 1.65% y/y (Q3-25: +1.25% y/y).
Given our projections for both the oil and non-oil sectors, we expect real GDP growth to settle at 4.01% y/y in Q4-25, with full year 2025 growth averaging at 3.84% y/y (vs. +3.34% y/y in 2024FY).
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