By BENJAMIN ORISEMEKE, Abuja –
Nigeria’s trade balance grew to N1.9 trillion, the worst since NBS started tracking trade performance 12 years ago.
In its Foreign trade in goods statistics report for February 2022, the National Bureau of Statistics (NBS) stated that imports stood at N20.8 trillion as at end of 2021, dwarfing exports that stood at N18.9 trillion.
Analysts at Afrinvest attributed the new trend to various factors. “We attribute this partly to a stronger rebound of trade in 2021 (Imports: 64.1 per cent year-on-year (y/y), exports: 51.0 per cent y/y) and an uptick in global inflation”, said Afrinvest.
However, in terms of quarterly performance, the trade deficit reduced in the fourth quarter of 2021 following a 12.3 per cent quarter-on-quarter (q/q) upsurge in export earnings to N5.8 trillion compared to the 11.3 per cent q/q growth in import bills to N5.9 trillion.
Consequently, the trade deficit declined 12.7 per cent q/q to N174.0 billion (0.9 per cent of Gross Domestic Product (GDP)) relative to the N199.3 billion recorded for third quarter of 2021.
The trend may continue with global inflation on the up tick. Already, the United States (US) Fed has hiked rate in response to rising inflation.
Analysts say, the continuous rise in the number of COVID-19 case will further disrupt supply chains and cause further inflation.
As of 17th March 2022, the number of confirmed COVID-19 cases stood at 462.8 million, up 2.3 per cent from the prior week while the death toll rose 0.5 per cent to 6.1 million.
Despite considerable progress in vaccine administration (10.8 billion administered vaccines), the negative outcomes of COVID-19 continue to have a staggering effect on the global economy.
Recently, China imposed a lockdown on the southern city of Shenzhen, a technology hub, to curb the spread of the virus. The underlying implication is a further constraint on the supply chain for the foreseeable future given that Shenzhen is home to cars and electronics manufacturing plants and the fourth-largest port in the world.
“We expect this would trickle down to the already high inflationary environment”, said analysts at Afrinvest.
To probably worsen matters, last week, Brent crude oil prices remained elevated, although moderated slightly 1.2 per cent to $107.7/bbl. fuelled by the ongoing Russia-Ukraine crisis.
The International Energy Agency (IEA) noted that the market could lose around 3mbpd of Russian oil next month, thereby driving oil prices back up as the crisis continues. On the domestic front, Nigeria’s external reserve continued its downward trajectory despite the elevated oil prices, dropping 17bps w/w to $39.7 billion (3/16/2022).
