December 11, 2017 / 6:29PM /FSDH
The positive developments in the crude oil markets and the improved confidence in the outlook of the Nigerian economy have improved Nigeria’s external sector position. The latest data from the National Bureau of Statistics (NBS) confirms this position. The data from the last seven quarters shows that Nigeria recorded the highest favourable trade balance (exports higher than imports) and capital flows in Q3 2017.
increase in the price of crude oil in the international market and improved
crude oil production in Nigeria led to a significant improvement in Nigeria’s
external sector position in Q3 2017. During the period, Nigeria’s trade balance
exceeded the N1trn mark for the first time since Q3 2014 to stand at N1.22trn
while capital inflows into Nigeria increased to US$4.15bn. The total value of
merchandise trade as at Q3, 2017 increased by 3.94% to N5.92trn from Q2, 2017.
exports accounted for 61% of the total trade while total imports accounted for
39%. The crude oil exports dominated the exports at 83.17% while non-crude oil
exports accounted for 16.83%. The huge contribution of crude exports to the
total exports revealed the vulnerability of the external sector to changes in
the oil market. Similarly, capital inflow in Nigeria in Q3 2017 recorded a
significant increase, hitting the US$4bn mark for the first time since the
beginning of 2015.
total capital imported into Nigeria in Q3 2017 was US$4.15bn, more than double
the inflow in Q2 2017 and a 127.49% increase year-on-year. The increase in
capital importation in Q3 2017 was mainly driven by significant growth in both
Foreign Portfolio Investments (FPIs) and Other Investments. FPIs increased by 259.17%
from Q2 2017, and contributed 66.76% to the total capital imported in Q3 2017.
Research expects the favorable developments in the crude oil markets to
continue to improve the external position. An increase in the external position
should also lead to stability in the foreign exchange market and possibly an
appreciation in the value of the currency. However, the current high crude oil
price will increase the subsidy the Federal Government of Nigeria will pay on
the Premium Motor Spirit (PMS) if there is no adjustment to the pump price.
2. Nigeria’s Merchandise Trade Grew Marginally Q-on-Q But Significantly Y-on-Y in Q3 2017
3. Total Value of Capital Imported into Nigeria in Q3 2017 Estimated at $4,145.1m - NBS
4. Movement by the FGN on Export Incentives
5. Headline Inflation Drops to 15.90% in November 2017; 0.01% Lower Than 15.91% October Rate
6. There is More to Economic Growth Than Numbers - LBS EBS – December 2017
7. Oil Sector Keeps Economy above Water in Q3’17 GDP
8. Headline Inflation to Dip Again To 15.88% in November
9. Q3 17 GDP: Oil Led Growth Mask Deceleration in Non-Oil
10. Manufacturing To Develop At Its Own Pace
11. Fitch Cuts Nigeria's 2017 GDP Growth Forecast to 1pct from 1.50pct
12. Inflation Rate to Decelerate Further to 15.84% in November
13. Q3 2017 GDP: Going Beyond the Surface Figures
14. Nigeria’s Q3 2017 GDP: Awoyemi, Rewane Raise Concerns Over Oil Induced Growth
15. Capital Flows Riding the Ranges