Nigeria’s Economy Grows By 3.89% In Q1 2026 As Agriculture, Services Drive Recovery Amid Oil Production Dip

New NBS figures reveal stronger economic expansion in early 2026, but declining oil output, inflationary pressure, and structural weaknesses continue to raise questions about sustainability

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By A1NEWS International Economic Desk / May 26, 2026

ABUJA, NIGERIA –Nigeria’s economy recorded a 3.89 per cent year-on-year growth in the first quarter of 2026, according to fresh data released by the National Bureau of Statistics, signaling a modest but notable improvement in economic activity across several key sectors.

The latest Gross Domestic Product (GDP) figures represent an increase from the 3.13 per cent growth recorded during the corresponding period in 2025, offering the clearest indication yet that parts of the Nigerian economy may be gradually stabilising after years of inflationary shocks, currency volatility, subsidy reforms, and declining household purchasing power.

However, beneath the headline growth numbers, analysts warn that the country’s economic recovery remains uneven, fragile, and heavily dependent on a narrow cluster of non-oil sectors, while millions of Nigerians continue to grapple with rising living costs and worsening economic hardship.

Agriculture Leads Economic Rebound

One of the most striking developments in the new GDP report was the strong rebound in the agricultural sector.

According to the NBS, agriculture expanded by 3.15 per cent in Q1 2026, compared to an almost stagnant 0.07 per cent growth recorded in the same period last year.

The sector’s resurgence was largely driven by crop production activities, which economists say remain critical to food supply, rural employment, and inflation control.

Analysts note that the improved agricultural performance may reflect:

Increased cultivation activities in some regions;
Relative improvements in farming logistics;
Expanded food demand;
Government intervention programmes;
Gradual adaptation to post-subsidy economic realities.

Despite the growth, insecurity in major farming belts, high fertiliser prices, flooding risks, and transportation challenges continue to threaten long-term agricultural productivity.

Services Sector Retains Dominance

Nigeria’s services sector remained the largest contributor to the economy during the quarter under review.

The sector recorded 4.31 per cent growth and contributed approximately 57.73 per cent of aggregate GDP.

Key drivers included:

Telecommunications;
Financial services;
Trade;
Real estate;
Transportation;
Construction activities.

The continued expansion of telecommunications and digital financial services once again highlighted the growing centrality of technology-driven sectors in Nigeria’s economy.

Experts say fintech expansion, mobile banking penetration, internet-based services, and digital commerce are increasingly cushioning the economy against shocks affecting traditional industries.

Oil Sector Growth Masks Production Concerns

Although the oil sector recorded a real growth rate of 2.57 per cent in Q1 2026 — higher than the 1.87 per cent recorded in Q1 2025 — concerns remain over declining crude production volumes.

Nigeria’s average daily crude oil production dropped to 1.55 million barrels per day during the quarter, lower than both:

1.62 million barrels per day recorded in Q1 2025;
1.58 million barrels per day recorded in Q4 2025.

The decline reflects persistent structural problems affecting the petroleum sector, including:

Oil theft;
Pipeline vandalism;
Underinvestment;
Operational inefficiencies;
Regulatory uncertainty;
Security disruptions in producing communities.

Despite oil’s strategic importance to government revenue and foreign exchange earnings, the sector contributed only 3.92 per cent to total real GDP during the quarter.

Economic observers say the shrinking relative contribution of oil further confirms Nigeria’s slow but continuing transition toward a more service-oriented economy.

Non-Oil Economy Carries National Growth

The non-oil sector emerged as the principal engine of economic expansion, recording 3.94 per cent real growth in Q1 2026.

The sector contributed over 96 per cent of total GDP, driven by:

Telecommunications;
Agriculture;
Manufacturing;
Financial institutions;
Road transportation;
Construction;
Trade.

Economic analysts say the data reinforces growing evidence that Nigeria’s economic survival increasingly depends on sectors outside crude oil.

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However, they caution that many of these sectors still face serious structural constraints, including:

High electricity costs;
Foreign exchange instability;
Multiple taxation;
Poor infrastructure;
Weak consumer spending power.

Nominal GDP Rises Above N110 Trillion

The NBS report disclosed that Nigeria’s aggregate GDP at basic prices stood at approximately N110.8 trillion in nominal terms during the first quarter of 2026.

This represents a 17.79 per cent increase compared to the N94 trillion recorded during the same period in 2025.

Economists, however, warn that nominal GDP growth alone does not necessarily translate into improved living conditions, especially amid persistently high inflation rates and weakened consumer purchasing power.

Several analysts argue that many Nigerians are unlikely to feel the direct impact of the reported growth due to:

Food inflation;
High transport costs;
Energy price increases;
Currency depreciation;
Rising unemployment and underemployment.

Mining and Quarrying Sector Shows Mixed Signals

The Mining and Quarrying sector posted nominal growth of 13.92 per cent year-on-year during the quarter.

Crude petroleum activities remained dominant within the sector, accounting for over 91 per cent of total sectoral contribution.

However, in real terms, the sector’s growth slowed to 1.89 per cent, reflecting ongoing volatility in extractive industries.

Experts say the figures reveal the persistent gap between nominal earnings and real productive expansion within Nigeria’s mining ecosystem.

Tinubu Administration Faces Economic Test

The latest GDP figures are expected to provide some political relief for the administration of President Bola Ahmed Tinubu, which has faced mounting criticism over inflation, subsidy removal, exchange rate reforms, and rising poverty levels.

Since assuming office, the administration has repeatedly argued that painful economic reforms were necessary to stabilise the economy and attract investment.

Supporters of the government say the improved GDP figures validate aspects of those reforms.

Critics, however, insist that macroeconomic growth has yet to translate into meaningful improvement in citizens’ welfare.

Opposition figures and labour groups continue to argue that:

Food prices remain unaffordable;
Electricity supply remains unstable;
Poverty levels are worsening;
Small businesses are struggling to survive.

Analysts Warn Recovery Remains Fragile

Economic experts caution that sustaining growth above 3.5 per cent may prove difficult without major structural reforms.

Among the major concerns identified are:

Persistent inflation;
Weak industrial productivity;
Insecurity;
Infrastructure deficits;
High debt servicing obligations;
Currency instability;
Limited job creation.

Analysts also warn that overdependence on consumption-driven services without equivalent industrial expansion may limit Nigeria’s long-term economic resilience.

Nigeria’s 3.89 per cent GDP growth in the first quarter of 2026 reflects signs of gradual economic recovery driven largely by agriculture, telecommunications, finance, and other non-oil sectors.

Yet the figures also expose deeper structural realities: declining oil production, persistent inflationary pressure, infrastructure gaps, and widespread economic hardship continue to challenge sustainable growth.

While the Tinubu administration may view the latest GDP report as evidence that its reforms are beginning to yield results, many Nigerians remain more concerned about the daily realities of rising living costs, unemployment, and declining purchasing power.

The central question now facing policymakers is whether Nigeria’s statistical growth can eventually evolve into broad-based economic relief for ordinary citizens.