*As capital inflow drops 71%
The nation’s trade deficit rose month-on-month (MoM) by 11 percent to $1.27 billion in October from $1.14 billion in September 2020, just as capital inflow fell by 71 percent to $19 million from $27 million within the same period.
The fall in capital inflow wasdue to tight global financial conditions, as countries, particularly the developed economies, struggle with the second wave of the COVID-19 pandemic.
In its latest Economic Report, Central Bank of Nigeria (CBN), noted that the value of aggregate external trade increased by 3.0 per cent to $5.55 billion in October 2020, compared with $5.39 billion in September 2020.
According to the apex bank, the MoM increase in total trade was largely on account of the increase in imports, mainly for up-scaling critical infrastructure and industrial use.
The report stated: “Provisional data showed that the value of aggregate external trade increased by 3.0 per cent to $5.55 billion in October 2020, compared with $5.39 billion in September 2020.
“However, the value showed a 59.4 per cent decline below the $13.67 billion recorded in the corresponding period of 2019.
“The month-on-month increase in total trade was largely on account of the increase in imports, mainly for up scaling critical infrastructure and industrial use.
“Merchandise imports increased by 4.3 per cent to $3.41 billion in October 2020, above the $3.27 billion in September 2020, driven by increase in non-oil imports, particularly raw materials.”
On exports, CBN stated: “Aggregate export increased marginally by 0.6 per cent to $2.14 billion in the review period, compared with $2.13 billion in the preceding month, driven mainly by rise in crude oil and gas exports.
“Consequently, a trade deficit of $1.27 billion was recorded in October 2020, compared with $1.14 billion in September 2020.
“Relative stability in crude oil prices at the international market led to a marginal increase in crude oil export receipts in the review period.
“Estimates showed that the value of crude oil exports increased by 2.0 per cent to $1.51 billion in October 2020, above $1.48 billion in September 2020, but was 62.7 per cent lower than $4.05 billion in the corresponding period of 2019.
“Gas exports, however, fell by 0.5 per cent to US$0.30 billion in October 2020, relative to the level in September 2020.
“The crude oil and gas sector dominated the export receipts, accounting for 84.6 per cent of the total.
“The effect of the COVID-19 pandemic on the global economy continued to adversely affect the country’s non-oil exports.
“Consequently, non-oil exports decreased by 2.7 per cent to $0.33 billion in October 2020, compared with $0.34 billion in the preceding month.”
“The import of non-oil products, which constituted 96.7 per cent of total import, increased to US$3.30 billion in the review period, above the US$3.15 billion in September 2020, due to the rebound in economic activities.
“However, capital inflow witnessed a decline of 71.4 per cent from the level in the previous month, as the effect of the COVID-19 pandemic continued to weigh on global financial markets and capital flows.”
