ECONOMY: Nigeria’s Trade Surplus Falls by 37.43% in 9M 2019, Food Imports surge as Nov. Inflation Rate Leaps to 11.85%…

    Women at a fish market in Makoko slums in Yaba, Lagos, Nigeria, October 9th, 2009. The extensive slum is built on top of water, using timber and iron sheets; and it is inhibited by the fishing community who live in Nigeria as immigrants from the neighbouring countries in Ghana, Benin and Burkinafaso. PHOTO/STEPHEN MUDIARI

    Recently published merchandize trade report by National Bureau of Statistics (NBS) showed that
    Nigeria’s foreign sector merchandise trade value
    rose year-on-year (y-o-y) by 10.03% to N26.03 trillion in 9M 2019. However, merchandise trade
    surplus plunged by 37.43% to N2.81 trillion in 9M 2019 given the slower rise in total exports which
    grew marginally y-o-y by 2.46% to N14.42 trillion (as value of crude oil exports fell y-o-y by 3.76%
    to N11.06 trillion) compared to total imports which surged y-o-y by 21.16% to N11.61 trillion.

    Specifically, import value rose chiefly on the back of a 120.35% spike in imported boilers, machinery and appliances to N3.35 trillion.

    In terms of geographical performance, Europe, especially spain, remained Nigeria’s biggest export market, having imported goods worth N5.65 trillion (or 39.17% of total exports) from Nigeria.

    Next was Asia which grew its purchases y-o-y by 2.88% N4.00 trillion (or 27.77% of total exports) and then Africa which accounted for 20.61% of total exports having grown y-o-y by 63.68% to N2.97 trillion.

    On the other hand, Nigeria’s largest imports still came from Asia, especially from China, at N5.41 (or 46.61% of total imports) following a 27.21% y-o-y increase.

    Next were imports from Europe which fell y-o-y by 11.68% to N3.53 trillion (or 30.41% of total imports) and America which spiked by 100.45% to N1.61 trillion (or 13.90% of total imports).

    Ultimately, Nigeria-European trade yielded the biggest surplus of N2.12 trillion in 9M 2019. This was followed by a trade surplus of N1.98 trillion with Africa.

    On the flip side, Nigeria recorded a trade deficit of N1.41 trillion with Asia in 9M 2019 (from a trade deficit of N0.36 trillion 9M 2018) as Nigeria’s import from China remained relatively large.

    In another development, the recently released November inflation report showed that headline inflation rate rose to 11.85% year-on-year, a further increase from 11.61% in October 2019 and the highest in 18 months.

    The rising trend in annual inflation was on the back of the sustained increase in annual food inflation.

    This was further lifted by the gentle upturn in core inflation rate which albeit remained in single-digit. Specifically, annual food inflation rate catapulted to 14.48% in November 2019 from 14.09% in October 2019.

    However, we saw monthly food inflation rate slide marginally m- o-m to 1.25% in the month of November, from 1.33% in the month of October, despite sustained closure of Nigeria’s land borders. On a state-by-state basis, November food inflation rate were highest at Sokoto, Kebbi, Ekiti and Adamawa States as rates hit 18.77% (from 16.35%), 18.08% (from 17.53%), 17.18% (from 15.78%) and 16.04% (from 15.32%) respectively.

    Imported food index rose by 1.26% m-o-m amid sustained depreciation of the Naira against the USD at the interbank window where two months moving average foreign exchange rate rose m-o-m by 0.06% to N358.31/USD in November 2019.

    Similarly, annual core inflation rate rose to 8.99% y- o-y in November 2019 from 8.88% in October 2019 as clothing and footwear, energy costs and transport inflation rates increased to 9.79%, 7.70% and 9.17% repectively. Also, core inflation increased on a monthly basis to 0.79% (from 0.74% in October).

    Keeping track of inflation in geographical areas, we saw inflation in both urban and rural areas rise to 12.47% (from 12.20%) and 11.30% (from 11.07%) respectively.

    We expect the rise in annual inflation rate to be sustained in December as food prices increase amid year-end festive season; however, we should see it moderate m-o-m in January 2020 amid likely slowdown in spending activities as businesses resume. Meanwhile, it appears Nigeria is on track to be competitive in global trade following recent moves by the monetary and fiscal authorities to improve the productivity of the small and medium scale enteprises via improving access to credit (CBN targets 70% loans to deposit ratio in 2020) as well as ongoing work on the 2019 finance bill, among other things.

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