Nigeria’s GDP Hits N110.8trn as Oil Weakness Threatens Growth
Nigeria’s economy expanded by 3.89 per cent in the first quarter of 2026, with Gross Domestic Product (GDP) rising to N110.79 trillion, but deep structural weaknesses in oil production, electricity supply and industrial capacity continue to cast a shadow over the country’s fragile recovery.
The latest GDP report released by Coronation Asset Management and obtained by LAGOS BUSINESS NEWS showed that although economic growth improved from 3.13 per cent recorded in the corresponding period of 2025, it remained below the 4.07 per cent growth posted in the fourth quarter of 2025, reflecting persistent pressure across key sectors of the economy.
Nominal GDP surged by 17.79 per cent year-on-year to N110.79 trillion, equivalent to about $79.14 billion at an exchange rate of N1,400/$, underscoring the impact of elevated prices and inflationary pressures on economic activity.
However, analysts warned that the impressive nominal expansion masks the weak purchasing power realities confronting households and businesses nationwide.
The report revealed that real GDP declined sharply by 19.87 per cent quarter-on-quarter, compared with a 19.72 per cent contraction recorded in Q1 2025, signalling slower economic activity after the year-end festive spending cycle.
Despite renewed growth momentum, the oil sector, traditionally Nigeria’s economic backbone, continued to underperform.
Oil GDP grew modestly by 2.57 per cent in Q1 2026, up from 1.87 per cent a year earlier, but the sector contributed only 3.92 per cent to total GDP, lower than the 3.97 per cent contribution recorded in Q1 2025.
Average crude oil production also fell to 1.39 million barrels per day (mbpd), below both the 1.47 mbpd produced in Q1 2025 and the 1.42 mbpd recorded in Q4 2025.
The development comes amid Nigeria’s continued struggle to meet its OPEC+ production quota and budget benchmark, placing pressure on foreign exchange earnings and government revenues.
Analysts noted that the outbreak of the United States-Iran conflict towards the end of February heightened volatility across global oil markets, with Brent crude prices fluctuating between $60.75 and $118.35 per barrel during the quarter.
While higher prices provided temporary support for oil receipts, Nigeria was unable to fully benefit due to infrastructure bottlenecks, weak production capacity and persistent operational challenges in the petroleum sector.
The non-oil economy remained the principal driver of growth, accounting for over 96 per cent of total output.
The services sector retained its dominance, expanding by 4.31 per cent year-on-year and contributing 57.73 per cent to GDP.
Telecommunications and Information Technology emerged as the strongest growth driver, recording 10.98 per cent growth and contributing 11.31 per cent to GDP, reflecting sustained demand for data, digital services and broadband connectivity.
The financial services sector also maintained strong momentum, growing by 8.54 per cent amid rising asset expansion across the banking and insurance industries.
Trade remained the single largest contributor to GDP at 17.89 per cent despite mounting inflationary pressure on consumer spending, while real estate accounted for 13.10 per cent of economic output.
Construction activity rose by 6.38 per cent, supported by ongoing infrastructure projects and cement demand across the country.
Agriculture recorded one of the strongest rebounds in the quarter, growing by 3.15 per cent compared with near-flat growth of 0.07 per cent in Q1 2025.
The sector contributed 23.16 per cent to GDP, driven largely by improved crop production, better planting conditions and the gradual impact of government intervention programmes aimed at boosting food output.
Analysts said the recovery in agriculture could help moderate food inflation if sustained into the second and third quarters of the year.
However, they warned that insecurity, flooding risks, high fertiliser costs and limited access to financing for farmers remain major threats to long-term agricultural productivity.
The industrial sector posted moderate improvement, growing by 3.50 per cent year-on-year and contributing 19.11 per cent to GDP.
Manufacturing expanded by 3.29 per cent, recovering from the severe disruptions caused by fuel subsidy removal and exchange rate reforms.
Cement manufacturing emerged as a standout performer, recording 11.53 per cent growth amid rising construction activities nationwide.
Yet, concerns persist over Nigeria’s weak industrial base and worsening infrastructure deficit.
The electricity, gas and air conditioning supply sector contracted by 15.30 per cent in what analysts described as the most severe drag on economic growth during the quarter.
The report noted that Nigeria’s power crisis continues to undermine manufacturing output, SME productivity and long-term industrial competitiveness.
The education sector also slowed significantly, growing by only 1.22 per cent compared with 2.47 per cent recorded in Q1 2025, reflecting mounting fiscal pressures and underfunding within the sector.
Coronation Asset Management projected Nigeria’s full-year GDP growth for 2026 at between 3.9 per cent and 4.1 per cent, but warned that the outlook remains dependent on stronger oil production, lower inflation, stable foreign exchange conditions and sustained growth across telecoms, finance and construction.
The report stressed that although the economy is gradually adjusting to reforms introduced in 2023, including fuel subsidy removal, exchange rate unification and tighter monetary policy, the country still faces significant structural constraints capable of limiting inclusive and sustainable growth.
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