As the Corona virus pandemic continues to intensify, Nigeria experienced plunged in its Foreign Trade as exports of crude oil dropped in the first quarter (Q1) of 2020 adding to the nation’s economic distress.
Nigeria recorded its second straight quarter with a negative trade deficit after posting 12 straight quarters with a positive balance, a report released by its National Bureau of Statistics stated.
The latest data from the NBS in its report on foreign trade in goods for Q1 2020 show the total value of trade as N8.3trn, representing a decrease of 18% on the preceding quarter. Compared with Q4, the total export value decreased by 14% q/q to N4.08trn, and the import value declined by 21% q/q to N4.22trn. Nigeria recorded N138.98bn trade deficit in the first quarter of 2020, which followed a deficit of N580bn the previous quarter. This points to two consecutive quarters of negative trade balances. The data were drawn primarily from the Nigeria Customs Service.
Imports and exports declines are due to the global economic slowdown triggered by Covid-19 pandemic
The National Bureau of Statistics commentary notes that the decline in the total import value was primarily due to q/q decreases in the value of imported raw materials, manufactured goods and energy-related goods by 8%, 32% and 72% respectively in Q1 2020.
Similar to preceding quarters, crude oil accounted for the largest share (72%) of total exports in Q1. That said, the value of crude oil exports declined by -19% q/q and -13% y/y. Furthermore, this is the lowest crude oil export value recorded since Q3 2017. The most challenging month to market crude came in the current quarter (April) although there has since been a healthy recovery in demand and the price in May and June. That recovery has been led by China, where the lockdown started and ended first among the larger economies.
Nigeria exported goods valued at N296bn to fellow members of the Economic Community of West African States. This represented 30% of total exports within Africa, in the quarter under review.
Recently, the Federal Government of Nigeria released a revised budget proposal for 2020 that cuts health care spending by 40 percent. The proposed cuts come after weak international markets for oil and retail resulted in lower revenue that could not support the record-high budget for 2020.