Nigeria’s economy is estimated to have expanded by approximately 3.7% in the first half of 2025, supported by improved business conditions and a rise in oil production.

This was disclosed in the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index report, compiled by S&P Global and released on Tuesday.

The Head of Equity Research for West Africa at Stanbic IBTC Bank, Muyiwa Oni, noted that the estimated 3.7% year-on-year GDP growth is in line with the projection for a full-year growth of 3.5%.

He said, “Insights from the monthly PMIs and crude oil production data from the Nigerian Upstream Petroleum Regulatory Commission suggest an economy that grew by an estimated 3.7 per cent y/y in H1 2025, supported by higher crude oil production and improved growth in manufacturing and services, while agriculture continues to lag its long-term average growth rate of 3.6 per cent.”

Oni added, “Given that inflation is expected to remain softer compared to the 2024 average, interest rates are likely to be lower this year and next, we expect a 150–200 bps rate cut in 2025 and a 200–250 bps cut in 2026.”

He stated that these factors—alongside structural reforms, the removal of protectionist policies, and the diminishing effects of earlier government reforms—are expected to support medium-term economic growth.

“We still expect the Nigerian economy to grow by 3.5 per cent y/y in real terms in 2025, but post-GDP rebasing may amplify this growth to 4.2 per cent y/y,” he noted.

The June PMI reading showed that business conditions remained in expansionary territory for the seventh straight month, though the pace of growth continued to ease for the third consecutive month following a peak in March. The headline PMI declined to 51.6 in June, down from 52.7 in May and below the 2025 average of 53.1.

The report linked the slowdown to reduced manufacturing output, while other sectors maintained positive growth momentum.

“Where output rose, respondents linked this to higher new orders and the acquisition of new customers. Indeed, new business increased solidly in June, though the pace of expansion slowed to a five-month low.”

Despite the slowdown, business confidence improved. “Sentiment reached its highest level since August 2022, nearing the series average. Those predicting growth cited plans to expand operations and invest in infrastructure.”

Staffing levels were mostly stable in June, following a slight dip in May. Backlogs of work rose for the third consecutive month, driven by material shortages, delayed payments, and power supply issues.

Supplier delivery times showed little change overall, though some firms reported delays due to poor road conditions.