Another Trade Deficit of N8.3trn in Q1 2020

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Monday, June 15, 2020 / 09:25 AM / By FBNQuest Research / Header Image Credit: Newsmax

                                                                                 

The latest data from the NBS in its report on foreign trade in goods for Q1 2020 show the total value of trade as N8.3trn, representing a decrease of 18% on the preceding quarter. Compared with Q4, the total export value decreased by 14% q/q to N4.08trn, and the import value declined by 21% q/q to N4.22trn. The net result was a deficit of N139bn, which followed a deficit of N580bn the previous quarter. This points to two consecutive quarters of negative trade balances. The data were drawn primarily from the Nigeria Customs Service.


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It is worth noting that the declines seen in both imports and exports are due to the general economic slowdown across the globe as a result of the varying degrees of restrictions with respect to international trade, travel and tourism triggered by the Covid-19 pandemic, which fully kicked in by end-Q1.

 

From the bureau's commentary we note that the decline in the total import value was primarily due to q/q decreases in the value of imported raw materials, manufactured goods and energy-related goods by 8%, 32% and 72% respectively in Q1 2020.

 

Similar to preceding quarters, crude oil accounted for the largest share (72%) of total exports in Q1. That said, the value of crude oil exports declined by -19% q/q and -13% y/y. Furthermore, this is the lowest crude oil export value recorded since Q3 2017.  The most challenging month to market crude came in the current quarter (April) although there has since been a healthy recovery in demand and the price in May and June. That recovery has been led by China, where the lockdown started and ended first among the larger economies.

 

Merchandise trade values (N' trn)

 

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Sources: National Bureau of Statistics (NBS) ; FBNQuest Capital Research

 

In the quarter under review, Nigeria exported goods valued at N296bn to fellow members of the Economic Community of West African States. This represented 30% of total exports within Africa.

 

There has been partial easing of lockdowns and restrictions across countries. However, supply chain disruptions are yet to recover in full.


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