Nigeria Records First Trade Deficit in Seven Years

Fri, Jun 3, 2016
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BREAKING NEWS, Business, Featured

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Nigeria, for the first time in seven years, records trade deficit of N793.5 billion in the first quarter of 2016

By Anayo Ezugwu  |  Jun 13, 2016 @ 01:00 GMT  |

FOR the first time in seven years, Nigeria recorded a decline of N793.5 billion in the first quarter merchandise trade of 2016 to close at N2.72 trillion from N3.51 trillion in the fourth quarter of 2015. In its trade statistics report released on Tuesday, May 31, the National Bureau of Statistics said the drop in the first quarter trade represented a decline of about 22.6 percent over what was recorded in the preceding quarter.

It attributed the decline in the first quarter trade to a sharp drop in both import and export trade, adding that while the country experienced a decline of N671.1 billion, representing 34.6 percent, in the value of exports, imports also dropped by N122.4 billion or 7.8 percent.

According to NBS, the difference between the country’s total exports, which was put at N1.269 trillion, and total imports of N1.454 trillion made Nigeria to record a negative trade balance of N184.1 billion in the first quarter.

“The total value of Nigeria’s merchandise trade at the end of first quarter of 2016 stood at N2.72 trillion. From the preceding quarter’s value of N3.51 trillion, this was N793.5 billion or 22.6 percent. This development arose due to a sharp decline in both imports and exports. Exports saw a decline of N671.1 billion or 34.6 percent, while imports declined by N122.4 billion or 7.8 percent.

“The steep decline in exports brought the country’s trade balance down to -N184.1 billion, or N548.7 billion less than in the preceding quarter. The crude oil component of the total trade decreased by N716.7 billion or 46.6 percent against the level recorded in fourth quarter of 2015.”

The NBS said the import trade stood at N1.45 trillion at the end of the first quarter of 2016 as against the preceding quarter’s value of N1.57 trillion. The structure of Nigeria’s import trade, according to the report, was dominated by the import of machinery and transport equipment, fuel and chemical-related products.

These accounted for 34.7 percent, 17.4 percent and 14.7 percent, respectively. On the other hand, the report stated that commodities such as oils, fats and waxes; beverages and tobacco contributed the least, accounting for 1.5 percent, 0.8 percent and 0.6 percent, respectively.

In terms of exports, the report revealed that the highest export product for Nigeria in the first quarter was mineral products, which accounted for N1.05 trillion or 83 percent of the total export earnings. The report showed that in terms of exports by continent, Nigeria mainly exported goods to Europe and Asia, which accounted for N467.1 billion or 36.8 percent and N360.6 billion or 28.4 percent, respectively.

Also, Nigeria exported goods valued at N161.3 billion or 12.7 percent to the continent of Africa, while that of the Economic Community of West African States was put at N50.4 billion. Financial analysts blamed the negative trade balance recorded in the first quarter of 2016 on the country’s inability to formulate an effective strategy to boost exports.

They also said the inability of exporters to know the economic direction of the government owing to the delayed passage of the 2016 budget as well as overdependence on revenue from oil were some of the major reasons for the decline in merchandise trade.

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