Nigeria’s 4.43% GDP growth fails to lift living costs as industry lags

Nigeria’s economy expanded by 4.43 per cent in Q2 2026, but economists warn that the stronger headline growth has yet to produce a broad improvement in living standards, as weak manufacturing growth, high prices, transport and energy costs continue to squeeze household purchasing power.

The latest figures from the National Bureau of Statistics (NBS) showed real GDP growth accelerated from 4.23 per cent in Q2 2025, while nominal GDP jumped 18.43 per cent to N119.29 trillion from N100.73 trillion a year earlier.

The wide gap between the real and nominal figures underscores the extent to which price increases continue to influence the value of economic activity.

Development economist Prof. Ken Ife said GDP growth measures the expansion of production and consumption but does not adequately capture poverty, income inequality or household purchasing power.

“The GDP growth does not reflect the state of the economy in respect to citizen welfare,” he said.

Ife raised particular concern about the industrial sector, arguing that manufacturing is not expanding fast enough to generate the jobs needed to transmit growth into household incomes.

While overall industrial growth stood at 3.96 per cent, down sharply from 7.46 per cent a year earlier, he estimated manufacturing growth at only about 1.3 to 1.5 per cent.

“The real sector should be generating employment and creating jobs, but it is not driving growth,” he said.

The sectoral figures show that agriculture and services carried much of the expansion.

Agriculture grew 4.39 per cent, up from 2.82 per cent in Q2 2025, while services expanded 4.60 per cent, compared with 3.94 per cent a year earlier.

Services accounted for 56.62 per cent of aggregate GDP, marginally above 56.53 per cent in Q2 2025.

Ife said the economy’s dependence on raw-material exports and imported finished products also limits the extent to which growth translates into domestic employment.

He pointed to the 18.43 per cent nominal GDP growth versus 4.43 per cent real growth as evidence that rising prices remain a major constraint on households.

“If the citizens are suffering from very high prices of goods, and the difference between nominal and real is so high, it shows that the people are being held hostage by high prices of goods,” he said.

The economist expects activity to strengthen in Q3 and Q4, supported by the harvest season and stronger consumer spending during the traditional “ember months” and Christmas period.

However, he warned that the outlook remains exposed to oil prices and production, insecurity, flooding, energy costs and transportation expenses.

Nigeria’s oil sector grew 7.31 per cent year-on-year in Q2, up from 2.57 per cent in Q1, but well below the 20.46 per cent recorded in Q2 2025.

Average crude production also improved to 1.72 million barrels per day, from 1.68 million bpd a year earlier and 1.55 million bpd in Q1.

Ife warned that any major decline in oil prices or output could weaken growth, while increased domestic refining could provide some support to industrial activity.

Agriculture also faces significant risks. Although harvest activity could lift third-quarter output, flooding and insecurity could disrupt production and raise the cost of moving food to markets.

Ife said population growth and urbanisation must also be considered when assessing the headline GDP figure. With population growth estimated at 3 per cent and urbanisation at 4.6 per cent, he argued that 4.43 per cent economic growth must translate into significantly higher incomes and employment before Nigerians feel a meaningful improvement.

Former President of the Chartered Institute of Bankers of Nigeria, Mr Okechukwu Unegbu, similarly questioned how far the expansion had improved household welfare.

“When you look at the poverty rate, which is not declining, and you tell me GDP grew by 4.43 per cent, how does this growth impact the average Nigerian?” he asked.

Unegbu urged the government to place greater emphasis on human-capital investment, education, employment and household purchasing power, while calling for greater transparency over the use of revenues generated following the removal of the fuel subsidy.

The wider economic picture is therefore mixed.

Nigeria is growing faster, with stronger agriculture and services activity and improved oil output. But industrial growth has weakened sharply, while high prices and elevated transport and energy costs continue to erode household purchasing power.

For Nigerians, the real measure of recovery will not simply be whether GDP rises above 4 per cent. It will be whether that growth produces more jobs, higher real incomes, cheaper production and transport costs, lower poverty and a measurable improvement in living standards.

Until that happens, economists warn, Nigeria’s stronger GDP headline will remain only a partial measure of economic recovery.