The Centre for the Promotion of Private Enterprise (CPPE) said the negative social impact of economic reforms has continued to weigh on households.

Insisting that despite improving fundamentals, disinflation and the falling prices of some food items and manufactured products, the cost-of-living crisis remains a concern.

CPPE in a policy brief on the third quarter 2025 gross domestic product (GDP), released on Monday by the National Bureau of Statistics (NBS), said the 3.98 per cent GDP growth shows the economy remained firmly on a path of steady recovery and consolidation.

The document, signed by the Chief Executive Officer of CPPE, Dr Muda Yusuf, said it is now imperative for policymaking to prioritise targeted interventions to address the uneasiness around the cost of living and ensure that GDP growth and macroeconomic stability translate into real improvements in citizens’ welfare.

The Q3 GDP figures released by the NBS saw the non-oil sector sustaining its dominance, contributing 96.56 per cent, driven mainly by agriculture.

CPPE said the Q3 performance highlights the positive impact of ongoing economic reforms, especially in stabilising the exchange rate, moderating inflation, improving fiscal conditions and gradually restoring investor confidence.

“These macroeconomic gains have strengthened business sentiment and supported activity across key sectors of the economy,” it said. It said the sustained recovery recorded in Q3 was largely supported by greater exchange rate stability resulting from FX market reforms, decelerating inflation and improved investor confidence.

“These developments demonstrate that the government’s reform programme is beginning to generate tangible and measurable outcomes across the economy,” the centre said.

CPPE observed that the services sector maintained its position as the largest contributor to GDP, accounting for 53 per cent of total output. It noted that the continued resilience of the sector, supported by digital adoption, financial services expansion and improved business confidence, remains central to overall economic performance. Agriculture grew by 3.79 per cent, up from 2.82 per cent in Q2.

“Despite this modest improvement, insecurity in farming communities, weak rural logistics, limited mechanisation, and declining purchasing power continue to constrain full-scale recovery,” it noted. It described the performance of the manufacturing sector as one of the weakest performances across major sectors, even though it expanded by 1.25 per cent.

It attributed the problem of the sector to persistent high energy and logistics costs, costly borrowing conditions, dependence on imported industrial inputs as well as smuggling. It noted that the structural weaknesses continue to erode competitiveness and limit job creation.

The ICT sector grew by 5.78 per cent, slightly below its Q2 growth of 6.6 per cent.
“The real estate posted an exceptional 89 per cent nominal GDP growth, fuelled by rising property values and asset revaluation. While favourable for investors in the sector, this trend intensifies housing affordability challenges, especially in major cities. Land administration reforms and affordable housing initiatives have become urgent”, CPPE noted. It identified financial services as the best-performing major economic sector, expanding by 19.63 per cent, up from 6.13 per cent in Q2.

“This reflects increased economic activity, stronger fiscal operations across all levels of government, and rising confidence in the financial system,” it noted.

To consolidate the gains recorded in Q3 and unlock stronger and more inclusive growth, the centre recommended that the government reduce structural bottlenecks by addressing energy supply constraints, reducing logistics costs, improving port efficiency and accelerating transport infrastructure development.