Nigeria’s Current Account Back Into Deficit In Q3 2018


Thursday, December 20 2018 / 10:33 AM / FBNQuest Research


In Q3 2018 Nigeria’s current account returned to a deficit, equivalent to -2.9% of GDP, compared with a downwardly revised surplus of 4.4% the previous quarter. The explanation is not the usual slump in oil export earnings, rather a surge in imports to their highest level since Q1 2015. We noted that the National Bureau of Statistics (NBS) explained the surge in its commentary on trade statistics for Q3 as due to imports of drilling platforms for the oil and gas industry.                                                                                                                

We have therefore a similar trend in the trade (customs) and balance-of-payment (BOP) series for Q3 2018. We note also that the new BOP data incorporates sizeable upward revisions for merchandise imports in both Q1 and Q2. 

The net deficit on services increased from -5.2% to -6.4% of GDP in Q3. In dollar terms, it was the highest deficit since the start of the current series in 2008. The source is a CBN summary with little detail so we suspect that the freight and insurance costs attached to the import of platforms are to blame. 

Net current transfers have remained within a range of 5.0% to 6.5% of GDP for two years but have slipped back since the start of this year. 


Trends on the balance of payments (%/GDP)

Proshare Nigeria Pvt. Ltd.


Sources: CBN; FBNQuest Capital Research



The BOP data for Q3 are provisional. If this negative trend on the current account is sustained in coming quarters, which is not our expectation, then Nigeria’s external balance sheet, a core selling point in the credit story, becomes much weaker. 

A national BOP committee has been established, chaired by the CBN and including the NBS. We understand that the treatment of transactions emanating from the oil joint-ventures will be covered.


Proshare Nigeria Pvt. Ltd.

Related News

1.       Nigerian Economy Gathers Momentum But Additional Policies Required to Achieve Strong Growth

2.      Overall Balance of Payments Swung Into Deficit of $4542.08m in Q3 2018

3.      Weekly Economic and Financial Commentary – WE 14th Dec, 2018

4.      7 Key Takeaways From The November 2018 Inflation Report

5.      Nigerian Economy in Perspective 2019 - Dysfunctional Policies and Structural Rigidities

6.      Gov. Emefiele Outlines Policy Thrust for 2019; Woos Foreign Investors

7.      Nigeria’s Merchandise Trade Rose Significantly in Q3, 2018

8.     Nigeria's Credit Profile Constrained By Exposure To Shocks Due To Low and Undiversified Revenue

9.      Fitch Revises Nigeria's Outlook to Stable; Affirms at 'B' Plus

10.  Fitch Rates Nigeria's USD Notes Final 'B' Plus

11.   Headline Inflation Increases By 11.28% YoY in November 2018; 0.02% Higher Than October 2018 Rate

12.  President Buhari to Present 2019 Budget to NASS on December 19, 2018

13.  Capital Importation Q3’18: FPIs Move To Money Market

14.  Sluggish Agricultural Output and Contracting Oil Sector Weigh on Growth

15.   Total Value of Capital Imported Into Nigeria Stood At $2,855.21m in Q3 2018

16.  Monthly Economic and Financial Market Outlook - Will Crude Oil Market Receive the Required Stimulus?

17.   Nigeria Gross Domestic Product Q3''18: Weak Growth Momentum Continues in Q3

18.  Nigeria’s GDP Grew By 1.81% YoY in Real Terms in Q3 2018 From 1.50% in Q2 2018

19.  Nigeria: Macro Economic Report for November 2018

20. Weekly Economic and Financial Commentary – WE 07th Dec, 2018

21.  Headline Inflation Expected to Inch up to 11.27% in November 2018 - FDC

22. Inflation Rate to Rise Marginally to 11.28% in November 2018 - FSDH

23. Reforms, Investments, and Jobs – Focus Of The Nigeria Economic Outlook Conference (NEOC) 2019

24. The Pivotal Role of FPIs

Proshare Nigeria Pvt. Ltd.

Related News