29, 2017 09:45AM / Proshare Research
The activity of any economy trading in the international market is often accompanied with costs and benefits. Nigeria being an open economy is not left out of this especially as it seeks to balance the dynamics of its exports and imports.
In this edition of our Proshare Confidential report we carried out an in-depth study of the Nigerian external economy in order to understand the reverberating effect of the export and import dynamics of Nigeria.
The bitter spill of 2015 taught an important lesson, that when external injections (exports) wean they automatically force the trio of government revenue, spending and consumption to readjust to the new reality. Thus, identifying the nature of Nigeria’s external economy has become important especially in relation to:
doing this, it allows us either validate the long held perception that Nigeria
is truly a neither import dependent nation or not. The conclusion arrived
at provides the needed hindsight on the nation’s external leakages and how best
to curb it.
In addition, an analytical study on external injections and weather we have gotten it right with regards export diversification was carried out thereby taking an holistic view at both external injections and how best to improve. At the same time considering the ripple effect of weak revenue injection coupled with crude pegs on the nation’s current account.
In similar vein, the study takes a look at the cash flow direction at the factor that affects both inflows the Central bank and invisibles, given its chunk of autonomous. We further took a cursory look at the global and sub-regional economies and likely falls out from the lack of policy Conesus, Nigeria’s budget for 2018 and weather it can provide the needed V recovery and a study of Morocco is able to attract foreign direct investment.
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The ability of an economy to achieve a balance between its domestic (government spending consumption and investment) and external components is very important in achieving targeted objectives. For developing economies that are commodity dependent, exports are becoming more inelastic while demand for capital goods keeps growing. This compounds the task of determining the best means of managing the domestic economy as it contends with the reality of leaner revenue and growing population.
Countries that have resisted the need to readjust have jolted their domestic economies as weaker invisibles affect their current account adversely. Sadly such countries are once again experiencing the bitter pill of a revolving door scenario. Whereby the inward shift by the external economy has left the domestic economy weakened and hard pressed.
Therefore this edition of Proshare confidential will take a look at both the export and import components of Nigeria. It becomes pertinent, especially now when expenditure policies are been adopted. Besides it allow us by take an in-depth look at diversification, if such is deep enough to address the weak export to GDP ratio.
Objective of the study
Understanding the dynamics between exports and imports is critical especially for a country like Nigeria whose foreign exchange inflow is largely from crude oil.
Thus, the essence of this study is:
1. States and the Rising Weight of Debt – Oct 2017
2. Money Supply: Reeling from Policy Response – Sep 2017
6. Article IV vs. ERGP - The Third Way – May 2017
7. Lifting The Veil off The Financial Sector – Apr 2017