Nigeria’s economy is grappling with a significant downturn, as its Gross Domestic Product (GDP) per capita fell by 4.74%, dropping from $877.07 in 2024 to $835.49 in 2025, according to the latest data from the International Monetary Fund (IMF).
This decline follows a consistent downward trajectory since 2014, when GDP per capita was recorded at a much higher figure of $3,220. Despite this, there is cautious optimism, with the IMF projecting a gradual recovery, predicting that Nigeria’s GDP per capita will exceed the $1,000 mark by 2028.
The decline in GDP per capita comes amid a rebasing of the country’s GDP, which has incorporated new sectors such as digital economy activities, pension funds, the National Health Insurance Scheme, and other emerging industries. This shift in calculation methodology reflects an attempt to more accurately capture Nigeria’s evolving economic landscape, although it has not shielded the economy from the broader downward trend.
Despite these challenges, there are signs of resilience in Nigeria’s private sector. According to the latest Purchasing Managers’ Index (PMI) report from Stanbic IBTC Bank, there has been a marked increase in business activity. The report shows a rise in both output and new orders for the second consecutive month, signaling growing confidence among businesses. Notably, companies have begun hiring more workers, reflecting a renewed commitment to investment and expansion. This positive trend, however, remains tempered by inflationary pressures.
Inflation remains a significant concern for Nigeria’s economy, with the year-end inflation rate for 2024 reaching 33.1%, up from 24.52% in 2023. This surge has been attributed to a combination of factors including the depreciation of the Nigerian naira, rising fuel prices following the full liberalization of the petrol sector, and a growing food supply crisis exacerbated by extreme weather conditions and high seasonal demand.
In terms of growth projections, the IMF forecasts that Nigeria’s real GDP will grow by 3.2% in 2025, while inflation is expected to ease slightly to 25%. This growth forecast, however, is lower than the 5.5% growth predicted by the Nigerian Economic Summit Group (NESG), which believes that continued stability-focused reforms can achieve this target. The NESG also cautioned that inefficient policy execution or economic constraints could cause the growth rate to dip to as low as 3.4%.
At a recent economic event, Central Bank of Nigeria Governor Olayemi Cardoso expressed a more optimistic outlook, predicting that the economy will grow by 4.1% in 2025. His forecast rests on the sustained implementation of government reforms, rising crude oil prices, and the revitalization of the domestic oil refining sector. He pointed to the expected contributions of the Dangote refinery and the rehabilitation of the Port Harcourt and Warri refineries, which he believes will boost economic activity in the coming year. Cardoso also highlighted the importance of a stable exchange rate in supporting continued growth.
As the Nigerian government and businesses look toward the future, the success of reforms will be crucial in navigating the economic challenges ahead. The country’s ability to implement effective policies, manage inflation, and maintain private sector growth will play a decisive role in determining whether the optimistic projections for 2025 come to fruition.
