Nigeria records a trade deficit for the third quarter in a row

NIGERIA – Nigeria, Africa’s largest economy, has recorded a trade balance deficit of N1.8tn (US$4.67 billion) at the end of the second quarter, a new report by Nigeria’s National Bureau of Statistics has shown.

This according to NBS, is the third quarter in a row that West African nation is recording a trade deficit.

This compares with trade in goods deficit of US$1.09 billion recorded in Q1, 2020 and US$1.50 billion recorded in Q4 2019.

According to data from NBS, Nigeria’s merchandise trade stood at N6.24tn (US$ 16.11 billion) in the second quarter of the year.

This indicated a sharp fall of 27.30 per cent in Q2, 2020 compared to Q1, 2020 and a 27.46 per cent drop when compared to corresponding period in 2019.

Nigeria’s value of total trade year-to-date amounted to N14.82tn (US$38.44 billion), indicating a drop of 11.96 per cent compared to half-year 2019.

The country’s import component was valued at N4.02tn (US$10.43 billion) representing a drop of 10.69 per cent in Q2, 2020 against the level recorded in Q1, 2020 but an increase of 0.39 per cent year-on-year.

Nigeria’s export component accounted for N2.21tn (US$5.73 billion) of the total trade, indicating a decline of 45.64 per cent against the value recorded in Q1, 2020 and 51.73 per cent fall when compared to Q2, 2019.

This trade imbalance according to the NBS consequently resulted in the country recording “a trade N1.8tn (US$4.67 billion), marking the third consecutive quarter of negative trade balance.”

The negative trade balance can be directly connected with the oil crisis and the raging corona virus pandemic.

Oil is Nigeria’s main export commodity accounting for over 70% of the country’s exports and was adversely affected by the oil crisis which was characterized by a steep fall in oil prices as Russia and Saudi Arabia engaged in a protracted oil war.

Oil prices fell from a high of US$65 per barrel in January to lows of US$24 a barrel in April, resulting in reduced earnings from oil exports.

According to NBS, the value of crude oil export was 18.86 per cent less than the value recorded in Q4, 2019 and 12.80 per cent lower than the value recorded in the corresponding quarter of 2019.

The corona virus pandemic further complicated issues for Nigeria’s oil sector as it nearly paralyzed economic operations in all major economies in the globe and thus resulting in a reduced demand for oil.

The National Bureau of Statistics notes that Nigeria last recorded a positive trade balance in Q3, 2019, when an increase in exports coupled with the decrease in imports led to a positive trade balance of US$3.58 billion during the period.

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