Report: Nigeria’s Growth Momentum May Slow in H2 Amid Weak Buying Power
Anticipates oil production growth
Emmanuel Addeh in Abuja
After a promising start at the beginning of the year, Nigeria’s economic momentum is expected to slow in the second half of 2025 as household spending power weakens and private consumption falters, according to the latest BMI sub-Saharan Africa Monthly Outlook.
The report showed that Nigeria’s real Gross Domestic Product (GDP) expanded by 4.1 per cent year-on-year in Q2 2025, up from 3.8 per cent in the first quarter, driven largely by stronger oil production and modest improvements in the services sector.
However, BMI projected that the growth would moderate in the coming months as elevated inflation, high interest rates, and tight credit conditions continue to constrain domestic demand.
The BMI sub-Saharan Africa Monthly Outlook, published by BMI – a Fitch solutions company, provides independent economic, industry, and risk analysis across emerging markets. The September 2025 edition assesses growth trends across Sub-Saharan Africa, drawing from national statistics and proprietary data to forecast short- and medium-term performance.
The publication noted that while Nigeria recorded an expansion in Q2, the overall outlook for the remainder of 2025 is less optimistic due to structural challenges that continue to weigh on consumption and investment.
According to the report, much of the Q2 growth stemmed from an acceleration in oil sector activity, supported by improved production volumes that rose from around 1.7 million barrels per day in Q1. The rebound followed earlier supply disruptions and was aided by stable oil prices during the quarter.
However, BMI highlighted that the oil sector’s influence on the broader economy remains limited, as the benefits have not translated into stronger household consumption or private investment.
Performance across key non-oil sectors was uneven, it said, stressing that transportation, financial services, and ICT recorded gains, while domestic trade and real estate continued to contract, reflecting ongoing pressure on consumer spending.
According to the report, rising prices and reduced purchasing power have resulted in subdued retail activity, with many households prioritising essential goods and services.
BMI’s analysis indicated that inflation remains a major concern for Nigeria’s economy, eroding disposable incomes and reducing consumer confidence. Despite the Central Bank of Nigeria’s efforts to control price growth through monetary tightening, inflation is expected to remain in double digits through the end of the year.
This, it said, has contributed to high borrowing costs, discouraging both private consumption and business expansion.
The report also noted that fiscal constraints could limit the government’s ability to stimulate growth in the short term. Public spending is expected to remain contained due to efforts to manage debt levels and maintain fiscal stability.
Additionally, structural issues such as unreliable power supply, limited access to credit, and slow infrastructure development continue to inhibit productivity and investment inflows.
BMI therefore predicted that Nigeria’s growth will slow in the second half of 2025 before stabilising modestly in 2026. The organisation suggested that sustained recovery will depend on the country’s ability to diversify away from oil dependency and strengthen sectors such as agriculture, manufacturing, and information technology.
“Real GDP (Gross Domestic Product) in Nigeria grew by 4.1 per cent y-o-y in Q2, up from 3.8 per cent in Q1, mainly driven by an acceleration in the oil sector. We expect growth to soften slightly in H2, 2025 due to weak household purchasing power and constrained private consumption.
“Growth in domestic trade and real estate slowed, highlighting persistent headwinds to domestic demand. We anticipate that oil output will inch up from the 1.7mn barrels per day recorded in Q2,” the Fitch solutions company stated.
President Bola Tinubu’s reform agenda has been one of the most sweeping in Nigeria’s recent history, touching nearly every aspect of the economy and governance. Since assuming office in May 2023, Tinubu has pursued policies he said are aimed at stabilising public finances, restoring investor confidence, and reshaping the country’s economic structure.
His administration’s earliest and most defining decision was the removal of the long-standing fuel subsidy, a move that, while praised by economists for its fiscal prudence, immediately triggered sharp rises in transport and living costs.
Tinubu also moved to unify Nigeria’s multiple exchange rates, a step meant to attract foreign investment and end years of currency distortions. The reform, however, came with short-term pains—rapid naira depreciation, higher import costs, and inflationary pressures that strained households and businesses.
