The Central Bank of Nigeria (CBN) has projected a 4.17% Gross Domestic Product (GDP) growth rate for 2025, attributing this optimistic outlook to ongoing fiscal and monetary reforms designed to stabilize the economy.
This projection surpasses both the 3.75% GDP growth estimate for 2024 and the World Bank’s 3.3% growth forecast for Nigeria in 2025, reflecting the CBN’s confidence in its policy measures.
During the virtual launch of the 2025 Macroeconomic Outlook Report, the CBN underscored that key economic indicators suggest accelerated growth, driven by stabilizing inflation, improved investor confidence, and a more favorable economic environment.
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Muhammad Abdullahi, Deputy Governor of the Economic Policy Directorate, announced the 4.17% growth projection at the 11th edition of the National Economic Outlook, reiterating the CBN’s commitment to sustaining economic recovery through policy-driven interventions.
CBN Governor Olayemi Cardoso further reinforced confidence in the GDP projection, emphasizing that structural reforms and fiscal discipline will play a crucial role in maintaining Nigeria’s economic trajectory. He also announced the establishment of a new compliance department, aimed at tackling economic challenges and aligning Nigeria with global financial standards.
The economic outlook has exceeded expectations, given that Nigeria’s 2024 GDP was initially projected at 3.75% but recorded stronger-than-expected performance across key sectors. The World Bank had projected a 3.3% GDP growth rate for 2025, underscoring a more cautious outlook. However, with the government ramping up economic reforms, there is growing optimism that Nigeria’s economy could outperform projections and reclaim its position as Africa’s largest economy.
Inflation Drops as Nigeria Rebases Consumer Price Index (CPI)
One of the most significant developments shaping the economic outlook is the sharp drop in inflation, with the annual rate falling to 24.48% in January 2025, down from a staggering 34.80% in December 2024. This drastic decline followed the rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS), a move aimed at improving the accuracy of inflation measurements and reflecting current consumer spending patterns and market trends.
However, food inflation remains a major concern, standing at 26.08% year-on-year, as Nigerians continue to grapple with high food prices. The CBN has maintained its benchmark interest rate at 27.50%, underlining its cautious approach to balancing inflation control with economic expansion.
Nigeria’s economic resilience has been stronger than anticipated, with GDP expanding by 3.84% year-on-year in the fourth quarter of 2024, up from the 3.46% growth recorded in both Q4 2023 and Q3 2024.
The services sector emerged as the biggest driver of growth, expanding by 5.37% and contributing 57.38% of the total GDP. While the non-oil sector remains the backbone of the economy, the agricultural sector continues to struggle due to rising production costs, insecurity in farming regions, and currency volatility.
Meanwhile, the oil sector, long a pillar of Nigeria’s economy, has made a modest positive contribution to overall GDP, aided by improved crude production levels and more stable global oil prices.
Between January and December 2024, Nigeria’s economy recorded an average annual growth of 3.40%, the highest since 2020, underscoring a steady recovery from the economic downturns of previous years.
The Bola Tinubu administration has embarked on some of the most ambitious economic reforms in recent years, pushing policies designed to stabilize public finances and attract investment. The removal of fuel subsidies, though controversial, has been positioned as a necessary step to free up funds for critical infrastructure and social programs.
Additionally, the floating of the naira, which led to a sharp currency devaluation, was implemented to create a more market-driven exchange rate system.
The World Bank has noted that Nigeria’s fiscal deficit improved significantly, shrinking from 6.2% of GDP in the first half of 2024 to 4.4% in the first half of 2025, reflecting tighter fiscal discipline and improved revenue generation.
However, the cost of living remains high, and many Nigerians have yet to feel the benefits of economic stabilization efforts. Economic experts have noted that the real test for the Tinubu administration will be ensuring that macroeconomic gains translate into tangible improvements in household incomes and business growth.
Nigeria’s Plan to Rebase GDP in 2025—A Game-Changer for the Economy?
In a move expected to reshape Nigeria’s economic rankings, the National Bureau of Statistics (NBS) has announced plans to rebase the country’s GDP by 2025, an exercise that will provide a more accurate picture of the nation’s economic output.
The last time Nigeria rebased its GDP was in 2014, then, the country was Africa’s largest economy, a title it has lost to South Africa. With a new rebasing on the horizon, there is belief that Nigeria could reclaim its position as Africa’s economic leader, provided its economic fundamentals remain strong.
The rebasing process will incorporate emerging industries, including the digital economy, fintech, and creative sectors, which have become increasingly vital to Nigeria’s economic landscape. Analysts suggest that a properly rebased GDP could significantly boost investor confidence, making Nigeria a more attractive destination for foreign direct investment (FDI).
The head of the NBS noted that the rebasing of both the GDP and CPI will ensure that Nigeria’s economic data reflects real market dynamics, aiding businesses, policymakers, and investors in making informed decisions.
Challenges On The Road to Growth
Despite Nigeria’s improving macroeconomic indicators, the high cost of living continues to erode household purchasing power, while inflation, though declining, remains a threat to economic stability. Foreign exchange volatility, persistent insecurity, and sluggish growth in the agricultural sector are key risks that could impact the country’s economic outlook.
Analysts note that an economy dominated by just a few industries is unsustainable in the long run. This means that while the telecommunications and financial services sectors provide a much-needed buffer for GDP growth, their success does not necessarily translate into broad-based economic prosperity, especially when sectors like manufacturing and agriculture remain stagnant.