Tuesday, September 07,
2021 / 11:55 AM / United Capital Research / Header Image
Credit: Brand News Day
The National Bureau of Statistics (NBS) released
Nigeria's Foreign Trade in Goods Statistics for Q2-2021. During the quarter,
total merchandise trade grew 23.3% q/q and 88.7% y/y to N12.0tn from N9.8tn in
Q1-2021 and N6.4tn in Q2-2020. The increase was due to a sharp growth (74.7%
q/q) in the value of export compared to N2.9tn in Q1-2021 and 128.3% y/y
compared to Q2- 2020.
As a result, export totaled N5.1tn, accounting for
42.2% (Q1-2021: 29.8%) of the entire trade component, while import was valued
at N7.0tn accounting for 57.8% (Q1-2021: 70.2%) of total trade. Consequently,
Nigeria's trade deficit declined by 52.6% q/q to N1.9tn in Q2-2021 from N3.9tn
The surge in export proceeds was driven by higher crude oil exports, which grew
111.3% q/q and 164.4% y/y to N4.1tn in Q2-2021 from N1.9tn and N1.6tn in
Q1-2021 and Q2-2020, respectively, accounting for 80.3% of total export trade.
The surge in crude oil receipts was broadly driven by higher oil prices with
average Brent price printing at $69.1/b in Q2-2021, 106.9% y/y and 12.7% q/q
higher than $33.4/b and $61.3/b in Q2-2020 and Q1-2021.
We also note the impact of naira devaluation in
Q2-2021 magnified naira value of export receipts in Q2-2021. On the import
front, trade value rose by 1.5% q/q and 67.5% y/y to N7.0tn in Q2-2021 from
N6.9tn and N4.1tn in Q1-2021 and Q2-2020, respectively. The growth in imports
reflects stronger post-pandemic consumer spending as well as relaxation of
domestic and international movement restrictions, improving cross-border trade
Overall, the contraction in trade deficit is a welcome development considering
the pressure on the exchange rate over the past 18 months. That said, we expect
the deficit to continue to moderate as we expect improved oil production from
Nigeria, following OPEC+ plan to sustain gradual increase in oil production
quota by 400,000bpd every month.
addition, we expect crude oil prices to remain stable in the near term.
Nevertheless, we reiterate the need for government to diversify the economy's
export proceed sources given the agelong vulnerability of export proceeds to
shocks in the crude oil market.
Trade Grew Stronger in Q2 2021 Due to Sharp Increase in Export
- Q1 2021: Current Account Deficit Narrows, but Trade Balance Remains
- Uptick in Q1 2021 Merchandise Trade
- Trade Deficit Widens to $9.61bn in Q1 2021; Naira Falls
- Q1 2021 Foreign Trade Report: Trade Deficit Worsens on the Back of
- Trade Deficit Widens in Q1 2021 on Increased Imports
- Nigeria's Merchandise Trade Deficit Deepens in Q1 2021 Due to Rising
- Another Trade Deficit in Q4 2020
- Nigeria's Q4 2020 Foreign Trade: The Pains and Pitfalls of Being
- Q4 2020 Foreign Trade Report: Recovery Not Enough
- Total Trade Higher By 8.9% in Q4 2020, Lower By 10.3% in FY 2020