In 2024, Nigeria's economy grew moderately thanks to the service industry and macro reforms. It is expected to continue to expand in 2025, but inflation and US tariffs pose challenges.

1. Economic growth

Nigeria's GDP growth rate in 2024 is 3.1%, lower than the average growth rate of 4% in sub-Saharan Africa. It is mainly affected by lower-than-expected oil production, foreign exchange shortages and worsening security situation. The IMF predicts a growth rate of 3% in 2025, which is still lower than the regional average. The inflation rate will rise from 21.3% in 2023 to 34.6% in 2024, and will continue to rise to 36.8% in the first quarter of 2025, mainly driven by food prices (accounting for 40%), currency depreciation (the naira depreciated by more than 100% against the US dollar) and imported inflation.

The 14% tariff imposed by the United States on Nigeria in 2025 may lead to a decline in the competitiveness of non-oil exports, indirectly impacting GDP by about 0.3-0.5 percentage points. Although oil exports are exempted, global oil prices fell by 10% due to the trade war (Brent crude oil fell to $65/barrel), weakening government fiscal revenue.

2. Consumption and investment

In 2024, consumption accounted for 76.3% of GDP and investment accounted for 18.7%. However, due to high inflation (34.6%) and falling real wages, household consumption expenditure and fixed capital formation (investment) both fell sharply year-on-year in real terms, household consumption as a percentage of GDP shrank significantly, and retail sales fell by 12% year-on-year. Fixed asset investment fell by 9% due to rising interest rates (the central bank's benchmark interest rate rose from 15.5% to 27.25%) and foreign capital outflows.

Consumption is expected to continue to be sluggish in 2025, food price inflation may reach 40%, and the savings rate will fall to a historical low of 4.8%. US tariffs have triggered the withdrawal of foreign capital, the stock market fell by more than 9.98% in a single day, and sovereign bond yields soared by 200 basis points, further suppressing investment willingness. Thanks to housing and oil and gas investment, the construction industry and real estate market are expected to grow in 2025.

Some analysts believe that the 14% reciprocal tariff imposed by the United States may drag down Nigeria's GDP growth in 2025, reduce the competitiveness of Nigeria's exports to the United States (especially agricultural products), increase import costs, aggravate domestic inflation, and hinder investment in manufacturing.

3. Development of key industries

Nigeria's pillar industries are oil and gas, agriculture, and manufacturing.

Oil and gas: Crude oil and condensate production in 2024 is 566 million barrels, lower than the budget target. Daily production fluctuates, recovering at the end of the year but still below OPEC quotas. The goal for 2025 is to increase daily production to more than 2.1 million barrels, but analysts are skeptical and a more conservative forecast is an increase of 200,000 barrels per day. US tariffs do not directly target oil and gas, but increased US production may reduce demand for Nigerian crude oil and may drive down oil prices through the global market.

Agriculture: Production will decline in 2023 due to a variety of factors (such as security issues and high costs), and growth will be moderate in 2024 (annual growth of 1.19%). Thanks to policies and reforms, prices of major grains are expected to stabilize, and agriculture is expected to grow significantly in 2025 (estimated to be 8.10%). US tariffs may hinder Nigeria's agricultural exports to the United States, reducing exports by about 2 trillion naira each year.

Manufacturing: Capacity utilization is less than 45%, the cost of imported raw materials has increased by 70% due to the depreciation of the naira, US tariffs have increased the cost of textile exports by 14%, and industry growth has stagnated.

4. Trade and investment between China and Nigeria

In 2024, Nigeria's total foreign trade will increase significantly by 106.56% to 138.03 trillion naira, achieving a trade surplus of 16.85 trillion naira.

The main export destinations are Europe, Asia, and the Americas, and the main import sources are China, India, and the United States. China is Nigeria's largest import partner (accounting for 23.36% of imports), and the main commodities are mobile phones, air conditioners, herbicides, etc.

In 2024, China-Nigeria trade volume exceeded US$20 billion, down nearly 3% from 2023. In 2024, the total value of China's exports to Nigeria was US$18.9 billion, a year-on-year decrease of 6.3%; the total value of China's imports from Nigeria was US$3 billion, a year-on-year increase of 25.8%. China is Nigeria's second largest export market in Africa and the largest recipient of engineering contracts.

It is predicted that the slowdown in global trade in 2025 may affect China-Nigeria trade. The escalation of US tariffs on China may lead to trade diversion, and African countries may benefit. However, Nigeria's trade deficit with China still needs attention. US tariffs may aggravate or alleviate this deficit, depending on whether Nigeria can increase exports to the United States to replace Chinese goods.

In 2024, Nigeria's main sources of investment are the United Kingdom, the Netherlands, and South Africa. In 2024, China's investment in Nigeria is concentrated in infrastructure, financial technology, technology and other fields. The two countries renewed a US$2 billion currency swap agreement to promote trade and investment.

In 2025, more than 216 Chinese companies expressed interest in investing in Nigeria, focusing on oil and gas, infrastructure, technology and other fields. Nigeria remains an early venture capital hotspot in West Africa.