Nigeria's economy expanded at its fastest pace in three years in 2025, supported by stronger output in agriculture and industry, as policymakers seek to entrench reforms in Africa's most populous economy.

Gross domestic product grew 4.07 percent year-on-year in the fourth quarter of 2025, higher than the 3.76 percent recorded in the same period of 2024, according to data released by the National Bureau of Statistics on Friday. For the full year, growth stood at 3.87 percent, up from 3.38 percent in 2024.

The latest print marks Nigeria's strongest annual performance since 2022 and extends the rebound from the pandemic-induced contraction of 6.96 percent in 2020. Growth recovered to 0.95 percent in 2021, accelerated to 4.32 percent in 2022, slowed to 3.04 percent in 2023, and has now strengthened for two consecutive years.

The fourth-quarter expansion was broad-based. Agriculture grew 4 percent, an improvement from 2.54 percent a year earlier, while industry rose 3.88 percent, up from 2.49 percent in the fourth quarter of 2024.

Services, which account for more than half of output, expanded 4.15 percent, slightly below the 4.75 percent recorded a year earlier but still contributed 55.92 percent of total GDP.

In nominal terms, GDP at basic prices rose 17.55 percent to N122.8 trillion in the fourth quarter, compared with N104.5 trillion in the same period of 2024, reflecting both real growth and elevated price levels.

The composition of growth shows familiar pillars. Crop production, trade, and real estate remained the top contributors, alongside telecommunications and construction. Crude petroleum and natural gas accounted for just 2.87 percent of real GDP in the quarter, underscoring the gradual diversification of the economy away from oil.

The stronger outturn comes as global lenders project further acceleration. The World Bank and the International Monetary Fund have forecast Nigeria's growth could reach about 4.4 percent in 2026 and 2027, which would mark the fastest expansion in roughly a decade if achieved.

That outlook hinges on sustained reform momentum, improved oil production, exchange-rate stability, and easing inflation. Nigeria has faced persistent price pressures and currency volatility in recent years, constraining household purchasing power even as headline growth improves.

But that narrative is gradually shifting as the country's macroeconomic conditions have begun to stabilise following radical reforms implemented nearly three years ago, including eliminating costly fuel subsidies and relaxing currency controls to allow market-determined pricing.

Those policies, though painful, have put the country back on its best footing in at least a decade, with inflation easing to 15 percent and the naira posting its first gains in more than a decade last year.

While the macros seem to be aligning, Nigerians still grapple with the cost-of-living crisis, and more than 60 percent of the population of 230 million people live in extreme poverty. Economists say for the recovery to be felt by the common people, the country must grow by about 10 percent annually.

"To see the impact on the lives of Nigerians, we need to translate the gains of these reforms into sustainable, solid growth and productivity. The economy has to grow sustainably by 8 to 10 percent," said Adetilewa Adebajo, CEO of CFG Advisory.