Market News

BY Odinaka Anudu and Arinze Nwafor

Nigeria’s real Gross Domestic Product grew by 4.43 per cent in the second quarter of 2026, up 4.23 per cent year-on-year, as members of the Organised Private Sector and economists hailed the country’s gradual economic recovery.

They, however, flagged the industrial sector’s familiar struggles, noting that energy unavailability, poor infrastructure and limited credit access are undermining the sector.

In its 2026 Quarter 2 GDP report, the National Bureau of Statistics reported that real GDP increased from N51.20tn in Q2 2025 to N53.47tn in Q2 2026, with the services sector emerging the largest contributor to economic output.

Services expanded by 4.60 per cent year-on-year in Q2, compared with 3.94 per cent in the same period last year. Agriculture also recorded a stronger performance, growing by 4.39 per cent, up from 2.82 per cent in Q2 2025 and 3.15 per cent in the first quarter of 2026.

On a quarter-on-quarter basis, agricultural output surged by 17.80 per cent, lifting the sector’s share of real GDP to 26.15 per cent during the quarter. The industrial sector, however, fell short, with growth slowing to 3.96 per cent from 7.46 per cent in Q2 2025.

The oil sector provided additional support to the economy, expanding by 7.31 per cent year-on-year as average daily crude production increased to 1.72 million barrels per day from 1.68 million barrels per day a year earlier.

The non-oil sector grew by 4.31 per cent, with the NBS identifying agriculture, information and communication, real estate, trade, financial and insurance services, manufacturing and construction among the key contributors.

The figures point to a gradual increase in economic activity, with services and agriculture providing support to growth despite weaker industrial sector performance.

OPS, economists react

In separate phone interviews with The PUNCH, members of the OPS, including President of the Lagos Chamber of Commerce and Industry, Leye Kupoluyi, said the figures aligned with the chamber’s projections and described the growth as a call for consistency in economic policy.

“We are extremely happy that the projections, as we witnessed in our last LCCI projection, fall in line with what we are seeing today. Growth is very good, and it is good for us to celebrate it. Stability is the real bedrock of the economy. What we are urging the government is that this trajectory should be sustained, so that it gives us confidence that we are on a shift that is not rocking, but a very stable one,” Kupoluyi said.

He added that the growth recorded in agriculture reflected years of advocacy by the private sector. “Food is a major item that rules our livelihood in Nigeria. With the growth in agriculture, people will find that food is no longer out of reach. It is a positive development, and we need to ask the government and the people taking these decisions to please do more,” the LCCI president noted.

On his part, National Vice President of the National Association of Small-Scale Industrialists, Segun Kuti-George, attributed the growth to a rebound in domestic crude oil production and food output.

“There is a rebound in our domestic food production. There was a time we were as low as a million barrels per day. Since the advent of this government, output has trended upward, and we are blocking leaks here and there. It has grown to about 1.7m barrels per day as of today. We hope that by 2027, we will have almost reached two million barrels per day,” Kuti-George added.

The NASSI VP explained that growth in financial services, telecommunications and fintech had also driven the services sector, but noted that the industrial sector remained constrained.

“There is a slight growth in the industrial sector, but the sector is still faced with the choking bottleneck of power. Unless we overcome power, the industrial sector will continue to operate under a very serious burden because dependence on generators remains. That increases the cost of output and reduces competitiveness with foreign goods,” he said.

Kuti-George also decried the high cost of borrowing for manufacturers, comparing Nigeria’s interest rates with those of other African countries.

“The cost of funding is still high. Keeping interest rates stable and maintaining the foreign exchange level are positive things, but something has to happen to bring down the cost of credit in Nigeria. Only Zimbabwe has something close to ours, and we cannot compare ourselves with Zimbabwe. That has to be looked at,” he said.

Economists provided a critical overview of the growth. Chief Executive Officer of Economic Associates, Dr Ayo Teriba, said the growth was underpinned by improved liquidity in the macroeconomy since 2023.

“You cannot have stability or growth without liquidity. The most important component of the success of President Bola Tinubu’s macroeconomic reforms since the second quarter of 2023 is the improvement in liquidity in the macroeconomy, which has led to increased availability of loanable funds and, ultimately, reduced cost of borrowing,” Teriba said.

He noted that Nigeria’s net reserves had grown from about $4bn to about $40bn, while stock market capitalisation had risen from about $30tn to more than $150tn within the period.

“The consequence of improved forex liquidity is a stable, convergent and appreciating exchange rate, and when the exchange rate is appreciating, inflation will decelerate. Liquidity begets stability, and in a stable, liquid environment, growth opportunities will easily be financed,” he said.

Teriba projected that GDP growth could surpass five per cent by the second quarter of 2027 if reforms were sustained.

“When President Tinubu came in, GDP growth was 2.5 per cent in Q2 2023. By 2025, it had accelerated to 4.23 per cent, and the one released today shows it has further accelerated to 4.43 per cent. If the president and his team keep their foot on the pedal, growth will continue to accelerate, and the acceleration will get more broadly based across sectors,” he said.

Similarly, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the GDP performance showed that a stable macroeconomic environment was translating into investment and growth.

“The improvement in the GDP has demonstrated that the macro environment is impacting growth and investment, which is why we are seeing the kind of growth we are seeing. The second quarter is typically better than the first, because a lot of things are usually slow in the first quarter. What’s striking about this quarter is that the agricultural sector also improved, which is good both for the economy and for poverty reduction, because agriculture employs a lot of people,” Yusuf said.

According to a Lagos-based emerging markets analyst, Ike Ibeabuchi, the GDP numbers point to the fact that services remain the bulwark of the Nigerian economy.

“It is also an indication that more activities are taking place in the agricultural sector. People are involved in food production, processing, and services. So, it simply shows where the government should channel its intervention programmes,” he said.

“So, rather than distribute cash, I would channel the funds to farmers to subsidise food production and delivery.”

Further breakdown

Trade remained the largest individual contributor to real GDP during the quarter, accounting for 17.93 per cent, followed by crop production at 17.66 per cent and real estate at 12.71 per cent. Telecommunications and information services contributed 9.72 per cent, while livestock accounted for 6.04 per cent.

Crude petroleum and natural gas contributed 4.16 per cent, followed by construction at 3.68 per cent, financial institutions at 2.94 per cent, food, beverage and tobacco manufacturing at 2.82 per cent, and public administration at 2.66 per cent.

The oil sector recorded average daily production of 1.72 million barrels per day in Q2 2026, up from 1.68mbpd in Q2 2025 and 1.55mbpd in Q1 2026. The NBS said the oil sector grew by 7.31 per cent year-on-year, significantly below the 20.46 per cent growth recorded in Q2 2025.

Despite the slowdown, the sector’s growth improved from 2.57 per cent in Q1 2026. On a quarter-on-quarter basis, oil sector growth stood at 10.91 per cent. Oil contributed 4.16 per cent to real GDP in Q2 2026, up from 4.05 per cent in Q2 2025 and 3.92 per cent in Q1 2026.

The non-oil economy grew by 4.31 per cent in real terms, improving from 3.64 per cent in Q2 2025 and 3.94 per cent in Q1 2026. The bureau identified crop production, telecommunications, real estate, trade, financial institutions, cement manufacturing and construction as the major drivers of non-oil growth.