Nigeria’s economic recovery is gaining momentum as the International Monetary Fund (IMF) revised its 2025 GDP growth projection to 3.4%, up from the previous 3.0%, igniting investor optimism, hopes for lower borrowing costs, and renewed interest in the Nigerian capital market.
According to the IMF’s July 2025 World Economic Outlook, the revision was anchored on improvements in key sectors — particularly oil production, services, and currency stability — and ongoing macroeconomic reforms by the Federal Government. The forecast for 2026 has also been upgraded to 3.2%, compared to the earlier estimate of 2.7%.
The upward revision comes at a time when Nigeria is showing resilience in the face of global economic uncertainty. According to analysts at Meristem Securities, the new growth outlook is a reflection of the strengthening services sector, increased local refining capacity, and reforms aimed at stabilizing the economy.
“The IMF revision acknowledges Nigeria’s macroeconomic progress and supports investor confidence. The positive outlook may lead to reduced country risk premiums, lower interest rates, and enhanced lending capacity for banks,” the Meristem report stated.
Q1:2025 GDP data further reinforces this optimism, showing year-on-year growth of 3.1% under a newly rebased GDP model. The services sector led with 4.3% growth, especially in Financial & Insurance (15%), Transportation (14.1%), and ICT (7.4%). The industrial sector also posted a 3.4% gain, while the agriculture sector stagnated at 0.1% growth, hindered by a 16.7% drop in livestock production.
Improved macroeconomic indicators have played a crucial role in shaping investor sentiment. Headline inflation dropped to 22.2% in June 2025, marking its third consecutive monthly decline and the lowest rate in six months. Monthly inflation also remained below the 2% mark in Q2:2025.
On the currency front, the naira stabilized, closing July at N1,533.55 per dollar, a marginal 0.1% depreciation year-to-date — a sharp contrast to the 38.8% depreciation recorded in 2024.
This currency stability, coupled with Brent crude oil’s rebound from $63.12 per barrel in April to $71.78 in July, has provided a firmer footing for fiscal planning, despite oil still trading below the government’s $75 benchmark.
Market experts from United Capital believe the upgraded growth outlook could lead to reduced lending rates, especially as banks grow more confident in the business environment.
“With improved economic conditions, businesses may secure cheaper financing, which would support SMEs, housing projects, and large-scale investments. A stronger naira would also ease the pressure on import costs, enhancing profit margins in manufacturing, pharmaceuticals, and retail sectors,” their report stated.
They further argued that with the right policy actions — particularly in addressing insecurity in food-producing regions, resolving power sector debt issues, and sustaining petroleum reforms — GDP growth could surpass 4.1% by the end of 2025.
Despite the brighter outlook, analysts at Afrinvest and Cowry Assets warned of persistent downside risks. These include structural issues in agriculture, tight credit conditions, insecurity, and the ongoing US-global trade tensions, which could affect global demand and capital flows.
However, they noted that the convergence of softer global inflation, a weakening US dollar, and modest global expansion creates a window for Nigeria to stabilize its macroeconomic fundamentals and attract foreign investment — provided that reform momentum is sustained.
The IMF’s revised projection of 3.4% GDP growth in 2025 underscores growing international confidence in Nigeria’s recovery trajectory. If policymakers can maintain reform consistency and address core structural issues, the country may not only reduce borrowing costs but also unlock long-term inclusive economic growth.