Nigeria’s trade deficit has improved significantly as the devaluation of the currency made exporters get more Naira for goods sold at the international markets.
For the first three months, and through June, the country’s trade deficit lessened by 44 percent to N196.5 billion from N351.3 billion the previous month, according to a recent report by the National Bureau of Statistics (NBS). Exports increased 63 percent to N1.9 trillion in the quarter.
The Central Bank of Africa’s most populous nation removed a currency peg that saw the Naira lose a third of its value against the dollar.
Nigeria’s economy contracted by 2.1 percent in the second quarter of the year, which means the country has slipped into a recession. The International Monetary Fund (IMF) forecasts that the economy will shrink by 1.80 percent by 2016.
Analysts are of the view that the rise in exports may not be sufficient enough to subdue the effects of rising inflation. Inflation rate increased to 17.10 percent in July from 16.50 percent the previous month on the back of forex scarcity, high price of gasoline, and high price of food stuffs.
“The improvement in export value is largely due to the depreciation in the value of the Naira,” according to the NBS report. “This development resulting in a rise of 63.3 percent in the value of exports was largely due to exchange rate gains combined with a rise of 38.1 percent in the value of imports against the levels recorded in the preceding quarter.”