…The latest growth figures place Nigeria broadly in line with the outlook of major multilateral institutions, though they also highlight the fragility of the recovery
MON MAY 25 2026-theGBJournal| Nigeria’s economic growth moderated in the first quarter of 2026 as weaker crude oil production offset resilience in the services sector.
Latest data from the National Bureau of Statistics (NBS) showed Gross Domestic Product (GDP) expanded by 3.89% year-on-year in Q1 2026, slightly below the 4.07% recorded in the previous quarter and marginally under analysts’ expectations.
While the growth rate remains stronger than Nigeria’s long-term average and broadly aligns with projections by the International Monetary Fund (IMF) and the World Bank for 2026, the slowdown raises questions about the country’s ability to sustain growth above 4% amid declining oil production, persistent inflationary pressures, elevated borrowing costs and lingering structural constraints across key productive sectors.
The NBS report revealed that the moderation in growth was driven largely by the oil sector, which expanded by just 2.57% year-on-year in Q1 2026, a sharp slowdown from the 6.79% growth recorded in the final quarter of 2025.
The weaker performance reflected a decline in average crude oil production to 1.55 million barrels per day (mb/d), compared with 1.62 mb/d in the corresponding period of 2025, representing a 4.3% contraction.
Although the oil sector’s contribution to GDP rose to 3.92% from 2.87% in the preceding quarter, the sector remains a relatively small component of overall economic output.
However, its significance to government revenues, foreign exchange earnings and fiscal stability means that sustained weakness in production continues to pose risks to broader economic performance.
The non-oil economy, which accounts for over 96% of GDP, remained the principal growth driver, expanding by 3.94 per cent year-on-year.
Nevertheless, this was slightly lower than the 3.99% growth recorded in Q4 2025, suggesting that domestic economic activity is also beginning to feel the impact of tighter financial conditions and weakening consumer purchasing power.
A sectoral analysis showed that services remained the strongest pillar of growth, expanding by 4.31% year-on-year, up from 4.15% in the previous quarter.
The sector contributed 57.73% of total GDP, underscoring the growing importance of telecommunications, financial services, trade and digital-driven activities in supporting economic expansion.
Industrial output also maintained positive momentum, though growth slowed to 3.50 per cent from 3.88 per cent in Q4 2025.
The sector accounted for 19.11% of GDP, benefiting from gradual improvements in manufacturing activity and increased domestic refining capacity, even as businesses continue to grapple with high energy costs and foreign exchange challenges.
Agriculture, traditionally one of Nigeria’s largest employers, recorded a more pronounced slowdown. Growth eased to 3.15% year-on-year from 4.00% in the previous quarter, with the sector’s share of GDP declining to 23.16 per cent.
Analysts attribute the softer performance to insecurity in food-producing regions, rising input costs, climate-related disruptions and logistical bottlenecks affecting food supply chains.
The latest growth figures place Nigeria broadly in line with the outlook of major multilateral institutions, though they also highlight the fragility of the recovery.
The IMF recently projected Nigeria’s economy to grow by around 3.4% in 2026, while the World Bank expects growth of approximately 3.6 to 3.8%, supported by ongoing economic reforms, exchange-rate liberalisation and improvements in domestic energy production.
At 3.89 per cent, Nigeria’s first-quarter performance is slightly ahead of both institutions’ full-year forecasts.
However, economists caution that maintaining this pace throughout the year will depend heavily on higher oil output, improved security conditions, stronger agricultural productivity and continued reforms aimed at stimulating private-sector investment.
The data suggest that while Nigeria’s economy remains on a growth trajectory, the slowdown from the previous quarter underscores the need for deeper structural reforms.
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