Nigeria’s economy recorded notable resilience in the second half of 2025, with growth increasingly driven by the non-oil sector even as crude oil output slipped below quota levels, according to the latest assessment by Organisation of Petroleum Exporting Countries (OPEC).
In its Monthly Oil Market Report released in mid-January 2026, OPEC acknowledged that Nigeria’s broader economy maintained solid momentum despite a challenging global environment and weaker performance in the oil sector. The organisation said expanding activity outside hydrocarbons helped offset the drag from declining crude production, reinforcing the country’s gradual shift toward a more diversified growth base.
Non-oil sector underpins H2 growth
OPEC noted that Nigeria “showed resilience in 2H25, posting sound growth despite global challenges, as strength in the non-oil economy partly offset slower growth in the oil sector.” This performance, the report said, reflected improving domestic conditions supported by easing inflation, a firmer naira, reduced refined fuel imports, and stronger remittance inflows.
Seasonally adjusted real GDP growth at market prices moderated slightly to 3.9 percent year-on-year in the third quarter of 2025, compared with 4.2 percent in the second quarter. Even so, OPEC described the pace as healthy and robust, pointing out that non-oil growth itself strengthened by 0.3 percentage points to 3.9 percent year-on-year, underscoring the sector’s increasing importance to overall economic performance.
Oil production slips below quota
While the non-oil economy gained traction, Nigeria’s crude oil production continued to underperform. OPEC data, citing primary sources, showed output fell to 1.422 million barrels per day in December 2025, down from 1.436 million bpd in November.
The organisation reported that Nigeria last met its production quota in July 2025, with output remaining below target from August through December. Quarterly averages for the year also revealed a steady decline: 1.468 million bpd in the first quarter, 1.481 million bpd in the second, 1.444 million bpd in the third, and about 1.42 million bpd in the fourth quarter.
This sustained shortfall highlights ongoing structural and operational challenges in the oil sector, even as global oil market conditions remain volatile.
Inflation cools, but policy stays tight
According to OPEC, Nigeria’s inflationary pressures eased steadily toward the end of 2025. Headline consumer inflation fell for an eighth consecutive month in November to 14.5 percent year-on-year, from 16.1 percent in October. The organisation attributed the disinflation trend to past monetary tightening, a stronger currency, easing food prices due to the harvest season, and a moderation in core inflation.
Despite this improvement, the Central Bank of Nigeria maintained a restrictive monetary stance. The bank kept its policy rate unchanged at 27 percent in December, reiterating its commitment to securing low and stable inflation and expecting earlier tightening measures to continue dampening price pressures.
OPEC cautioned, however, that while preserving recent disinflation gains is crucial, persistently high interest rates — implying real rates of around 12 percent — could weigh on aggregate demand in the near term if maintained for too long.
Government signals possible rate cuts
Amid the easing inflation trend, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has signalled that interest rate cuts could be considered if disinflation continues.
Speaking on the sidelines of Abu Dhabi Sustainability Week, Edun said a sustained slowdown in inflation would create room for further easing, potentially lowering borrowing costs and reducing the government’s heavy debt-servicing burden. He noted that lower interest rates would free up revenue currently devoted to debt payments, improving Nigeria’s fiscal balance at a time of strained public finances, volatile oil revenues, and a widening fiscal deficit.
Edun also praised the Central Bank’s efforts to tame inflation, describing its progress as excellent and crediting aggressive monetary tightening over the past two years. The CBN more than doubled its policy rate from 2022 levels before implementing a modest 50 basis-point cut in September, which brought the benchmark rate to its current 27 percent.
Inflation data revisions add uncertainty
Meanwhile, inflation reporting itself is undergoing changes. The National Bureau of Statistics has announced plans to publish two separate inflation figures for December following revisions to its consumer price index methodology.
According to a report by Bloomberg, the methodological adjustments caused headline inflation to more than double in preliminary readings. Sources cited by Bloomberg said the December data, scheduled for release on January 15, could show an “artificially spiked” inflation rate of about 31.2 percent, compared with 14.5 percent in November.
The Central Bank has indicated that it has already factored in the CPI rebasing and related computational issues in its three-year inflation forecast and continues to target a slowdown toward roughly 13 percent by next year, despite short-term distortions in the data.
diversification gains traction
OPEC’s assessment suggests that Nigeria’s economic story in the latter half of 2025 was increasingly shaped by diversification rather than oil alone. While crude production challenges persist and monetary policy remains tight, the strengthening non-oil sector, easing inflation, and improving external conditions provide a more balanced foundation for growth heading into 2026.
