Nigeria’s trade deficit gains in Q2 not enough to help the economy avoid a recession- NBS

Nigeria’s trade deficit narrowed in the second quarter of 2016 following currency float in June and lifting exports, but the National Bureau of Statistics (NBS) said on Tuesday that gains were  not enough to help the economy avoid a recession.

Nigeria’s economy entered recession in the second quarter, as sustained low crude oil prices impacted negatively public finances and the naira, forcing portfolio investors to abandon local bond and equities markets.

Central Bank of Nigeria had in June floated the Naira as part of efforts  to ease dollar shortages and safeguard dwindling foreign reserves.

The government bank technically allowed the Naira dip 30 percent on the day of the float from its 16-month pegged rate of 197 per dollar.

The currency move helped Nigeria’s trade balance gain some ground to stand at minus N196.5 billion in the second quarter, from minus N351.3 billion in the first quarter, NBS said.

“The improvement in export value is largely due to the depreciation in the value of the Naira.

“This development arose from a rise of 63.3 percent in the value of exports largely due to exchange rate gains combined with a rise of 38.1 percent in the value of imports against the levels recorded in the preceding quarter,” NBS explained.

The Naira has since lost 16 percent since June on a lack of hard currency liquidity and as foreign investors stay on the sidelines, leaving the central bank as the main supplier of dollars.

Total trade between April and June stood at N3.94 trillion, up 49 percent from the three months to March. The NBS said exports were dominated by crude oil, which contributed 79.7 percent of total exports of N1.87 billion.

Imports rose 38.1 percent in the second quarter to N2.07 billion.

The bulk of Nigeria’s imports were machinery and appliances, vehicles and aircraft parts and petroleum products. They came mostly from China, Netherlands, United States and India.