September 3, 2020/Cordros Report
Nigeria’s trade position worsened at the half-year as the merchandise trade deficit widened from NGN421.26 billion in Q1-20 to NGN1.80 trillion in Q2-20. This marks the third successive quarterly deficit, and the largest since at least 2008, as exports plummeted to a four-year low following the pandemic-induced global oil price crash and lower domestic crude oil output. Global and Nigerian demand continues to face a long and shaky path toward recovery. Thus, we see trade struggling to regain ground quickly over the rest of the year.
Domestic and international economic activities were negatively impacted by the global shelter-in-place mandates, which were implemented to stem the spread of the COVID-19 virus. Consequently, Nigeria’s merchandise trade fell by 27.5% y/y in Q2-20 (Q1-20: +4.2% y/y) to NGN6.42 trillion, according to data from the National Bureau of Statistics (NBS).
Exports declined significantly by 51.7% y/y (Q1-20: -10.0%) while imports increased marginally by 0.4% y/y (Q1-20: +21.6% y/y), leading to NGN1.80 trillion trade deficit, the largest on record. We note that the deficit in Q2-20 is 80.3% larger than deficits recorded in Q1-20 and Q4-19 combined.
Sequentially, merchandise trade declined by 27.3% q/q as exports (-45.6% q/q) fell faster than imports (-10.7% q/q).
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