May 29, 2026/Cordros Report
According to the recently published Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS), Nigeria’s real GDP rose by 3.89% y/y in Q1-26, down from 4.07% y/y in Q4-25. The weaker momentum primarily reflects a seasonal slowdown consistent with historical trends, particularly in the oil (+2.57% y/y vs Q4-25: +6.79% y/y) and non-oil (+3.94% y/y vs Q4-25: +3.99% y/y) sectors. The moderation in the oil sector was broadly driven by lower crude oil production. Performance in the non-oil sector was marginally weaker, driven by slower growth in agriculture (+3.15% y/y vs Q4-25: +4.00% y/y) despite stronger expansion in services (+4.31% y/y vs Q4-25: +4.15% y/y) and manufacturing (+3.29% y/y vs Q4-25: +1.13% y/y) subsectors. In terms of output composition, the non-oil sector’s contribution to GDP moderated to 96.08% (Q4-25: 97.13%), while the oil sector’s share increased to 3.92% (Q4-25: 2.87%).
Oil Sector Remains in Expansion
GDP growth in the oil sector moderated to 2.57% y/y in Q1-26 (Q4-25: +6.79% y/y), driven by lower oil production compared to the prior year. According to the NBS, oil production fell by 4.3% y/y to an average of 1.55mb/d in Q1-26 (Q1-25: 1.62mb/d). We attribute this below-trend performance to maintenance-related shutdowns and lingering operational disruptions across key production assets, as ageing infrastructure continued to undermine output reliability. Notably, the Bonga terminal was taken offline for scheduled maintenance in February and mid-March, weighing on production during the quarter, before output recovered in April. Specifically, oil production declined across the Tulja (-24.9% y/y), Aje (-22.1% y/y), Forcados (-11.3% y/y), Odudu (-13.0% y/y), and Escravos (-1.4% y/y) terminals, while production increased in the Brass (+26.7% y/y), Qua Iboe (+14.6% y/y), and Bonny (+7.1% y/y) terminals.
Non-Oil Sector Records Tempered, but Resilient Growth
In Q1-26, non-oil sector growth eased to 3.94% y/y (vs Q4-25: +3.99%), primarily reflecting slower momentum in the agricultural (+3.15% y/y vs Q4-25: +4.00% y/y) sector. Nonetheless, stronger growth in the manufacturing (+3.29% y/y vs Q4-25: +1.13% y/y) and services (+4.31% y/y vs Q4-25: +4.15% y/y) sectors helped offset part of the drag, keeping overall non-oil growth relatively resilient. We believe the sharp appreciation of the naira in Q1-26 partly supported activity by easing imported input cost pressures, thereby helping to cushion the typical post-festive slowdown that followed the strong demand recorded in Q4-25.
Services: Within the services sector, the ICT (+10.98% y/y vs Q4-25: +7.55% y/y), financial and insurance (+8.54% y/y vs Q4-25: +8.30% y/y), trade (+2.08% y/y vs Q4-25: +2.00% y/y), and construction (+6.38% y/y vs Q4-25: +5.08% y/y) subsectors grew at a faster pace, while transportation and storage (+7.41% y/y vs Q4-25: +21.25% y/y) and real estate (+2.29% y/y vs Q4-25: +3.43% y/y) subsectors slowed during the quarter.
In the ICT subsector (+10.98% y/y vs Q4-25: +7.55% y/y), the improved performance was driven by stronger growth in telecommunications (+12.24% y/y vs Q4-25: +8.39% y/y), reflecting robust demand for voice and data services. Furthermore, we attribute the expansion to higher broadband penetration (Q1-26: 54.30% vs Q1-25: 47.73%) and higher subscriber base (Q1-26: 185.72 million vs Q1-25: 172.71 million) during the period.
Growth in the trade subsector improved slightly (+2.08% y/y vs Q4-25: +2.00% y/y), supported by a mild improvement in consumer demand, as disinflation, aided by naira appreciation in January and February, helped ease some pressure on household purchasing power. However, we believe the sharp March inflation uptick likely tempered spending momentum towards the end of the quarter.
By contrast, growth in the transportation segment moderated sharply to 7.41% y/y in Q1-26 (Q4-25: +21.25% y/y), largely reflecting weaker road transport activity (+9.64% y/y vs Q4-25: +23.86% y/y), as the usual post-festive moderation in travel demand was compounded by heightened insecurity and banditry along key transport corridors. The slowdown was further reinforced by the contraction in air transportation (-7.62% y/y vs Q4-25: +15.17% y/y), as higher airfares, weak household purchasing power and softer post-festive passenger traffic weighed on activity, while the increase in aviation fuel prices in March added further pressure on airline operations.
Meanwhile, financial and insurance (+8.54% y/y vs Q4-25: +8.30% y/y) services grew, as financial institutions (+8.40% y/y vs Q4-25: +7.08% y/y) continued to benefit from elevated rates, which supported net interest income. This was, however, partly offset by the sharp moderation in the insurance segment (+9.94% y/y vs Q4-25: +21.37% y/y), likely reflecting lower fair value gains on investment assets, which weakened profitability despite sustained core insurance activity.
Elsewhere, real estate activity (+2.29% y/y vs Q4-25: +3.43% y/y) remained subdued, as structural factors, including low purchasing power, increased transaction costs, persistently high borrowing costs and tighter financing conditions, continued to dampen demand.
Agriculture: In Q1-26, agricultural sector growth slowed from the previous quarter, primarily due to lower crop production (+3.39% y/y vs Q4-25: +3.94% y/y) associated with the typical post-harvest moderation and persistent insecurity in key food-producing regions. Notably, livestock production expanded by 2.20% y/y in Q1-26, marking its first positive Q1 growth since Q1-22 (+7.52% y/y). However, livestock growth moderated from 4.07% y/y in Q4-25, likely reflecting the usual post-festive slowdown in meat demand, alongside still-elevated feed costs and weak consumer demand. Fishing (+1.72% y/y vs Q4-25: +2.15% y/y) and forestry (+4.14% y/y vs Q4-25: +6.52% y/y) also grew at a slower pace.
Manufacturing: The manufacturing sector expanded by 3.29% y/y in Q1-26 (Q4-25: +1.13% y/y), supported by stronger activity in the cement (+11.53% y/y vs Q4-25: +4.12% y/y) and food, beverage and tobacco (+4.10% y/y vs Q4-25: +2.25% y/y) industries. The robust cement performance was likely driven by stronger construction activity (+6.38% y/y vs Q4-25: +5.08% y/y), aided by sustained public infrastructure spending and ongoing road and bridge projects. The expansion also likely reflected increased cement exports to neighbouring markets due to firm regional demand and the competitiveness of domestic producers. In the food, beverage and tobacco segment, growth was supported by improved consumer demand, easing imported input cost pressures following the naira appreciation, particularly in January and February, and relatively stronger production activity during the period. Additionally, oil refining (+37.46% y/y vs Q4-25: +12.33% y/y) grew significantly, reflecting improved operational capacity and higher petroleum output at local refineries.
On the other hand, textile, apparel and footwear contracted, though at a slower pace (-1.22% y/y vs Q4-25: -2.68% y/y), reflecting deeply entrenched structural bottlenecks — elevated input costs, weak purchasing power, stiff competition from lower-cost imports and chronic power supply constraints. These factors continue to erode the competitiveness of domestic producers, with no near-term catalyst sufficient to reverse the structural headwinds.
Q2-26 GDP Outlook – Growth to Remain Resilient Despite Growing Challenges
Oil GDP: Crude oil production is expected to rebound in Q2-26, following the slump recorded in the previous quarter. We expect the recovery to be driven by the completion of the turnaround maintenance that resulted in the shutdown of the Bonga terminal in February and mid-March. In addition, efforts by indigenous oil operators to raise production through brownfield redevelopment and drilling programmes are expected to unlock previously shut-in volumes and improve recovery rates.
Additionally, the ramp-up of new oil fields, intensified pipeline surveillance and the full operationalisation of key evacuation infrastructure, particularly the FSO Cawthorne terminal, should strengthen offshore evacuation reliability and reduce dependence on vulnerable onshore infrastructure, thereby limiting crude theft-related losses. We also expect improved security coordination across key producing corridors to sustain the production gains in Q2-26.
However, the growth momentum is likely to remain modest, constrained by persistent structural bottlenecks, including ageing upstream assets, recurring and prolonged maintenance activities, underinvestment in legacy fields, crude theft risks and infrastructure vulnerabilities across parts of the production and evacuation chain.
Overall, we project crude oil production to average 1.70mb/d in Q2-26 (Q1-26: 1.55mb/d | Q2-25: 1.68mb/d). That said, given a high base in the corresponding period of the previous year, we anticipate a modest oil sector growth of 3.19% y/y in Q2-26 (Q1-26: +2.57% y/y | Q2-25: +20.46% y/y).
Non-Oil GDP: Despite recent spikes in inflationary pressures, tight financial conditions and persistent structural bottlenecks, we expect the non-oil sector to remain resilient. We project the non-oil sector to expand by 4.25% y/y in Q2-26 (Q1-26: +3.94% y/y | Q2-25: +3.64% y/y). The growth will be primarily driven by a stable naira and continued expansion in the digital economy. Across subsectors, we expect stronger growth in the services sector, while the agriculture and manufacturing sectors are likely to grow at a slower pace.
Services: We forecast the services sector to expand by 4.61% y/y in Q2-26 (Q1-26: +4.31% y/y | Q2-25: +3.94% y/y), primarily reflecting still robust growth in ICT, real estate, financial and insurance subsectors amid slower growth in the trade subsector.
Specifically, we anticipate slightly moderated but still robust growth in the ICT subsector (+9.25% y/y vs Q1-26: +10.98% y/y| Q2-25: +6.61% y/y), partly constrained by higher operational costs. That said, we expect rising broadband adoption, stronger data traffic and higher average data usage per subscriber to support real activity and sustain the resilient growth in the sector, reflecting the growing reliance on digital platforms for payments, e-commerce, entertainment, remote work and social interaction.
We anticipate improved growth in the financial and insurance (+9.59% y/y vs Q1-26: +8.54% y/y | Q2-25: +16.13% y/y) subsector, primarily reflecting banks’ strong net interest income, sustained growth in digital payments, increased transaction volumes and continued insurance uptake. Nonetheless, growth, particularly in financial institutions, will likely remain in single digits. Tight financial conditions following the MPC’s decision to keep interest rates at elevated levels are expected to keep funding costs elevated, sustain cautious loan repricing by banks and limit the pace of credit creation across the economy.
While we forecast improved growth in the real estate subsector (+4.12% y/y vs Q1-26: +2.29% y/y | Q2-25: +3.80% y/y), activity is expected to remain constrained by elevated construction costs, high borrowing costs, weak household purchasing power and high property transaction costs. These factors are expected to continue weighing on housing affordability, limiting new project development and moderating transaction activity across the property market.
Conversely, we forecast a moderation in the trade (+1.56% y/y vs Q1-26: +2.08% y/y | Q2-25: +1.29% y/y) subsector. The expected slowdown is likely to reflect softer consumer demand, as rising inflation further weakens purchasing power and constrains household spending. At the same time, higher energy prices are expected to raise transportation, logistics and operating costs for businesses. However, sustained naira stability and improved FX liquidity should help cushion the slowdown by supporting import availability and improving business planning.
Growth in the transportation (+10.35% y/y vs Q1-26: +7.41% y/y | Q2-25: +22.09% y/y) sector is likely to improve in Q2-26 following increased mobility during the Easter and Eid al-Adha festivities, alongside sustained commercial activity across road transport, logistics and aviation services. However, the underlying pace of expansion will likely be capped by elevated petrol, diesel and aviation fuel costs, which are expected to continue raising operating expenses and weighing on passenger and freight movement relative to same period of the previous year. More importantly, heightened insecurity is likely to weigh on activity in the road transport subsector, as safety concerns along key transport corridors are expected to continue disrupting passenger movement, increasing logistics risks and raising operating costs for transport operators.
Agriculture: We project the agricultural sector to expand at a slightly faster pace of 3.52% y/y (vs Q1-26: +3.15% y/y | Q2-25: +2.82% y/y), supported by stronger festive-driven demand. That said, seasonal and cost-side pressures are likely to cap further upside. Regarding crop production, Q2 typically marks the onset of the lean season, with planting activities underway; however, elevated fertiliser and fuel costs are likely to weigh on the scale of cultivation. Conversely, festive consumption during the Easter and Eid al-Adha celebrations is likely to support continued expansion in the livestock subsector. However, insecurity in key producing regions, elevated feed costs, weak veterinary infrastructure and logistics bottlenecks are expected to remain key constraints to stronger growth.
Manufacturing: High energy costs, tight financial conditions and fragile consumer demand are expected to soften momentum in the manufacturing sector. We anticipate slower growth across the food, beverage, tobacco and cement industries. The cement industry is also likely to be further weighed down by the onset of the rainy season, which typically slows construction activity. Textile, apparel and footwear are also expected to remain in contraction, as there appears to be no near-term catalyst sufficient to reverse the structural decline entrenched in the subsector. However, we anticipate continued growth in oil refining, supported by sustained expansion in domestic refining capacity and higher output from operational refineries. Of note, Kpler, a global commodities data and analytics firm, estimates that the Dangote Refinery approached maximum capacity in April, with crude runs reaching approximately 640,000 barrels per day. This should continue to support growth in the oil refining segment. Overall, growth in the sector is estimated to moderate to 2.98% y/y (Q1-26: +3.29% y/y | Q2-25: +1.60% y/y).
Given our projections for both the oil (+3.19% y/y) and non-oil (+4.25% y/y) sectors, we expect real GDP growth to print at 4.20% y/y in Q2-26, with full-year growth averaging 4.23% y/y in 2026E.
