- Nigeria Recorded N104Billion Negative Trade Balance in Q3
The National Bureau of Statistics (NBS) has disclosed that Nigeria recorded a negative trade balance of N104 billion in third quarter of this year.
NBS, which newly released the data in its ‘3rd Quarter 2016 External Trade News: Trade Intensity Index/Re-Exports Analysis’, put the total value of Nigeria’s external trade in the third quarter at N 4.721.9 trillion. It pointed out that the figures consisted of exports worth N2.309 trillion and imports worth N2.413 trillion, indicating a slight negative trade balance of N104 billion.
Giving a breakdown, it noted that, “As in previous quarters, the sector, which contributed the most to total trade was crude oil, which was all for exports,” stating that, “In total this sector accounted for N1,944 billion, or 41.2per cent of the total trade in the third quarter of 2016.”
“The manufacturing sector had the second largest share of total trade, accounting for N1,218.3 billion or 25.8per cent of the total, but in contrast to Crude Oil, was dominated by imports. Other Oil products was also a prominent sector, and accounted for N1,029.4 billion, or 21.8per cent of the total. The remaining sectors were a relatively small proportion of total trade. Raw Materials accounted for 6.37per cent of the total, Agriculture accounted for 4.43per cent, Solid minerals accounted for 0.43per cent, and trade in Energy goods was negligible at N0.1 billion,” it added.
On the export intensity index with major trading partners, the statistical agency explained that, the index “compares the share of exports to each country in Nigeria’s total exports, with the share of world exports going to that country, and therefore gives a measure of the importance of that country to Nigeria as an export destination.”
Accordingly, it noted that, “A higher number denotes a stronger relationship, and an index of one indicates that exports to that country are what would be expected given global trade patterns. In quarter three, Nigeria had a particularly strong export relationship with India, with export intensities of 5.6, 8.3 and 3.9 July, August and September respectively.
“Spain was also a key export market with intensities of 3.6, 4.4 and 1.9 during the same months. Despite more exports going to the US than Spain, this was due to the importance of the US as a global market, and the country nevertheless had lower intensities, of 1.2, 0.7 and 0.9 . France and the Netherlands were the other two largest export destinations, and recorded intensities of 0.8, 3.6 and 0.6 for France, and 1.1, 1.8 and 0.9 for the Netherlands.
As for the import intensity index with major trading partners, the NBS noted that, “This index mirrors the export intensity index, and measures the importance of Nigeria as an export destination for other countries. “
According to the agency, “Nigeria’s major trading partners in terms of import were China, Belgium, Netherlands, United States and India. During the quarter, the import intensity of Nigeria with China was 1.09, for July 1.08 for August and 0.65 for September.
These figures, it explained, were around one, and therefore indicated that China’s exports to Nigeria reflected the global share of imports accounted for by Nigeria.
“By contrast, Belgium – the next leading consumer of Nigeria’s products – showed high import intensities with Nigeria, of 4.35, 3.54 and 2.19 for the months July to September, denoting a stronger relationship. The Country’s import intensities were also high with India (2.57, 2.49 and 1.28) and the Netherlands (4.38, 2.57 and 1.04) during the same months.
“However, the import intensity of Nigeria with United States and Spain were lower, with indices less than one other than for Spain in August. This is possibly a result of the mix of products imported from these countries, which may have been affected more by the CBN import regulations,” it added.
Besides, in terms of the major import partners, NBS stated that, “As in previous quarters, the country that Nigeria imported the most goods from in the third quarter of 2016 was China. In total, China accounted for N478.7 billion, or 19.8 per cent of total imports.”
Nevertheless, it added, “this is a lower share of total imports than the country accounted for in the previous quarter.”
“Belgium and the Netherlands were the next most important import partners, and accounted for N331.1 billion (13.7 per cent) and N299.7 billion (12.4 per cent) respectively. They were followed by USA, India and France, which recorded N165.5 billion (6.86 per cent), N121.3 billion (5.03 per cent) and N91.3 (3.78 per cent) respectively,” it pointed out.
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
Crude Oil Holds Steady Above $55 Per Barrel on Tuesday
Brent Crude oil, against which Nigerian crude oil is priced, rose from $54.46 per barrel on Monday to $55.27 per barrel as of 9:03 am Nigerian time on Tuesday.
Last week, Brent crude oil rose to 11 months high of $57.38 per barrel before pulling back on rising COVID-19 cases and lockdowns in key global economies like the United Kingdom, Euro-Area, China, etc.
While OPEC has left 2021 oil demand unchanged and President-elect Joe Biden has announced a $1.9 trillion stimulus package, experts are saying the rising number of new cases of COVID-19 amid poor vaccine distribution could drag on growth and demand for oil in 2021.
On Friday, Dan Yergin, vice-chairman at IHS Markit, said in addition to the stimulus package “There are two other things that are going with it … one is of course, vaccinations — in the sense that eventually this crisis is going to end, and maybe by the spring, lockdowns will be over.”
“The other thing is what Saudi Arabia did. This is the third time Saudi Arabia has made a sudden change in policy in less than a year, and this one was to announce (the) 1 million barrel a day cut — partly because they are worried about the impact of the surge in virus that’s occurring,” he said.
Also, the stimulus being injected into the United States economy could spur huge Shale production and disrupt OPEC and allies’ efforts at balancing the global oil market in 2021.
Crude Oil Pulled Back Despite Joe Biden Stimulus
Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.
Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.
On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.
OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”
“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”
Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.
“The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.
Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.
But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.
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