From 58th to 55th largest – how Nigeria’s GDP climbed up the world rankings in 1 day

A new base year – which essentially means measurement of GDP, or the final value of goods and services in any particular year, with respect to the prices prevailing in that year – does not automatically lead to a larger economy. However, Nigeria’s base-year revision exercise included other more meaningful changes in the manner in which the African nation calculates the GDP.

This included increasing the scope of its methodology to include previously undercounted sectors such as digital services, pension fund operations, and e-commerce activities, among others, in what the NBS has called “by far the most comprehensive rebasing” it has ever carried out. As the NBS said, technological development, structural changes, and changes in production and consumption patterns mean “the methods and data used in estimating GDP must change with the times to reflect current economic realities”.

This is not the first time Nigeria has seen such a huge increase in its GDP due to the base year revision. More than a decade ago, change in the base year from 1990 to 2010 had helped propel Nigeria to the position of Africa’s largest economy thanks to an even-larger 89 per cent increase in the GDP to $510 billion in 2014.

Wait, $510 billion? Has the Nigerian economy shrunk by half in the last 10 years to $243 billion? Well, sort of. At least in US dollar terms.

Points of concerns

While the rebasing brings Nigeria $50 billion closer to achieving the government’s target of becoming a $1 trillion economy by 2030, the objective is well-nigh impossible after the Nigerian currency, the naira, was devalued sharply in 2023 and 2024. The result was that the naira fell by 49 per cent against the US dollar in 2023 and another 41 per cent in 2024.

“Even using the new series, currency devaluations in 2023 and 2024 mean that Nigeria’s economy has not recovered its previous position as Africa’s largest economy,” a note by research firm BMI, a part of the Fitch Group, said on July 23.

The GDP rebasing also brought into spotlight changes in the Nigerian economy that will not make for happy reading. One, the share of agriculture in the country’s GDP had increased to almost 26 per cent in 2019 from 22 per cent estimated earlier, while that of industry declined sharply to 21 per cent from 27.65 per cent. Two, the contribution of the informal sector to the GDP has increased to 42.5 per cent from 41.4 per cent.

And while a larger GDP has helped reduce the debt-to-GDP ratio to 38 per cent from 51 per cent, it does little change the outlook for Nigeria, whose GDP grew 3.13 per cent year-on-year in the first quarter of 2025, data released on July 21 showed. A day later, the Central Bank of Nigeria’s Monetary Policy Committee left the Monetary Policy Rate unchanged at 27.5 per cent. Headline retail inflation, which declined for the third straight month in June, remains above 20 per cent.

“Long-running issues that have plagued sectors like agriculture from insecurity to climate risk remain. And President Tinubu’s ambitious 6 per cent per annum target will require significant improvements in human capital levels as well reforms to help lift the persistently low investment rate. And while the rebasing exercise may have helped to lower the debt-to-GDP ratio, the government’s revenue-generating capacity and capacity to repay the debt hasn’t changed. Fiscal discipline and tax reforms are still needed to keep public finance risks in check,” David Omojomolo, Capital Economics’ Africa Economist, said on July 22.

The Indian experience

India, of course, is no stranger to GDP revisions; in fact, the Ministry of Statistics and Programme Implementation (MoSPI) is currently in the process of updating the GDP base year to 2022-23 from 2011-12. The rebased GDP numbers will be released in February 2026.

The last time India’s key macroeconomic indicator underwent a major revision was in 2015, when questions were raised about the accuracy of the numbers even by the Reserve Bank of India (RBI) after the GDP growth rate for 2013-14 was initially revised upwards to 6.9 per cent from 4.7 per cent, prompting Raghuram Rajan – then the governor – to comment that the Indian central bank found it “hard to see the economy as rollicking in 2013-2014”.

As per latest IMF data, India’s nominal GDP in 2024 in US dollar terms was $3.91 trillion, putting it in the fifth spot in the world, just $117 billion behind Japan in fourth.