- Crude shipments fell by almost half from previous quarter
- Economy contracted in the three months through March
Nigeria recorded its first quarterly trade deficit in at least seven years in the three months through March as exports of crude oil dropped, adding to the nation’s economic distress.
The trade balance of Africa’s largest economy swung to a deficit of 184.1 billion naira ($925 million) from a revised surplus of 364.6 billion naira in the previous quarter, the Abuja-based National Bureau of Statistics said in an e-mailed statement on Tuesday. Exports declined by more than a third to 1.45 trillion naira as the value of shipments of crude oil, which usually accounts for over 90 percent of Nigeria’s foreign earnings, fell by almost half from the preceding quarter.
Nigeria’s economy is under pressure after the price of oil, which contributes two-thirds of government revenue, fell by more than half since mid-2014, and production dropped to a 27-year low of 1.4 million barrels a day following the re-emergence of an insurgency in the key oil-producing Niger River delta region. The economy shrunk by 0.4 percent in the first quarter, the first contraction in more than a decade, and central bank Governor Godwin Emefiele said on May 24 a recession is imminent.
“Exports are obviously suffering, and it’s mainly because of oil,” Alan Cameron, an economist at Exotix Partners LLP in London said by phone on Tuesday. “The militants have caused production to drop, but we don’t know how severe the effect will be since we don’t know how long the decline in production will last.”
The value of crude oil exports declined to 821.8 billion naira in the three months through March, from 1.5 trillion naira in the previous quarter, according to the statistics office. Non-crude oil shipments increased to 448 billion naira from 402 billion naira.
Nigeria has held its currency at 197-199 per dollar since March 2015, even as other oil exporters from Russia to Colombia and Malaysia let theirs drop amid the slump in crude prices. Foreign reserves dwindled as the central bank defended the peg. Emefiele said last week policy makers were considering greater flexibility in the foreign-exchange market.
The International Monetary Fund forecasts Nigeria’s economic growth could slow to 2.3 percent this year, from a 16-year low of 2.8 percent in 2015. Gross domestic product could expand by 4 percent next year as the government increases investment in infrastructure needed for growth, and diversifies into agriculture and solid minerals production, Finance Minister Kemi Adeosun said last week.