Thursday, July09, 2020 / 09:29 AM / by FBNQuest Research / Header ImageCredit: FBNQuest            

Nigeria'scurrent-account deficit narrowed in Q1 2020 from -5.4% of GDP the previousquarter to -4.3%. The trade deficit narrowed in tandem from -1.2% to -0.4% ofGDP. Oil and gas exports of US$11.2bn were the lowest since Q2 2017 but thedecline in merchandise imports was still more dramatic, reflecting the lockdownin January in China, the principal source of imports, and the same event inNigeria itself in March. Non-oil imports decreased by US$4.0bn on the previousquarter. There was a smaller decline in services imports, led for obviousreasons by transportation.

This was the seventh current-account deficit in succession. Thisunwelcome trend stems from the stagnation in the oil and gas sector, the narrowproduction base of manufacturing, population growth of about 3% per year, and apreference in some quarters for imported goods and services.

Encouragingly, the balance-of-payments (BoP) data show a healthy increasein non-oil exports, from US$3.5bn in 2017 to US$4.7bn and US$10.5bn in 2018 and2019. The underlying success stories could include cement, cigarettes, cashewnuts, sesame seeds and cocoa. The CBN show these exports as non-oil andelectricity because the FGN has an agreement to export power to the NigerRepublic. 

Making a call for Q2 presents a challenge. The shadows of recession andof the pipeline of delayed external payments hang over the BoP. Merchandiseexports would have fallen due to the weaker crude price, notably in April, andimports due to the domestic lockdown and squeezing of demand. Debits fortravel, transportation and business services would have fallen sharply.

For the compilation of this quarter's data, the CBN's statisticsdepartment would have again worked with its revised assumptions for informalcross-border exports and imports following the land border closure inmid-August.

Related News

1. Current Account: Deficit on the Run as Pressure Mounts
2. COVID-19 in Nigeria: Economic Perspectives and Mitigating the Risks
3. Coronanomics: Nigeria Needs Economic Pragmatism and Robust Institutions - Dr. Temitope Oshikoya
4. Nigeria's Total Public Debt Stood At N27.40trn in Q4 2019 - NBS
5. High Debt Service, Low Revenue Collection
6. FAAC Disburses N647.35bn in February 2020 - NBS
7. PMI Reading No 84: Fall on Global Headwinds
8. Debit on the Services Account Exceeds $10bn in Q4 2019
9. Modest Rise in the FGN's Domestic Debt; Debt Stock At N14.27trn As At December 2019
10. Nigeria's Current Account Deficit Widened from -2.2% to -5.4% in Q4 2019