Nigeria’s 2017 Trade Balance: The Macro Wheel Is Still Oil-Driven

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In line with the broad-based macro recovery of 2017, the recently released Foreign Trade in Goods Statistics for Q4-17 and FY-17 by the National Bureau of Statistics (NBS), showed that the net trade balance for 2017 jumped 65.2%q/q and 1491.0%y/y to N1.8tn and N4.03tn in Q4-17 and FY-17 respectively. Further analysis of the data indicated the massive jump was due to the ramp-up in crude oil export, up 57.6%y/y to N11.0tn following the restoration of calm in the Niger-Delta region. Oil export contributed 81.1% of the total export while non-oil exports contributed 4.6% of the total export in 2017, signifying Nigeria’s continued dependence on crude oil as the major source of export earnings.

The positive change in the oil market dynamics in 2017, as well as the implementation of a series of economic policy reforms, have seen the return to stability in the FX market in 2017, a development that turned out to be the silver bullet for Nigeria’s economic doldrums. However, economic growth is still fragile, hence a rebalancing is urgently needed to achieve more sustainable growth. In the short term, if heightened political uncertainty manifests in disruption to oil output as 2019 election approaches, recent macro gains could vanish overnight.

To achieve a meaningful macroeconomic development in the medium term, there needs to be a concerted effort towards investing in the real sector to boost non-oil export.

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