Following the recent second quarter 2024 report as announced by the National Bureau of Statistics (NBS) of the nation’s N6.94 trillion trade surplus, a Nigerian-based independent think tank and research organisation, Pol Eco Analytics, has said though the news is cheering, it’s not a sign of improved economy target.
It clarified that the existence of a trade surplus is an economic indicator of a positive trade balance, where a nation’s exports exceed its imports but not enough to reduce the high cost of living and ease of doing business in Nigeria.
This was contained in a statement made available to LEADERSHIP over the weekend in Abuja, signed by the Senior Researcher and Policy Analyst, Pol Eco Analytics, Adefolarin A. Olamilekan.
It will be recalled that the NBS had reported last week that Nigeria’s total trade stood at N31,892.46 trillion in the second quarter of 2024, the figure representing a decrease of 3.76 per cent over the value recorded in Q1 2024 of N33,1 trillion and an increase of 150.39 percent compared to the value recorded in Q2 2023.
In detail, the report stated that total exports stood at N19,418.93 trillion, accounting for 60.89 of total trade, while total imports stood at N12,473.53 trillion, showing that exports increased by 1.31 percent compared to the amount recorded in the first quarter of 2024 at N19,167.36 trillion.
Significantly, total exports in Q2 of 2024 increased by 201.76 percent when compared to Q2 of 2023, which was recorded at N6,435.13 trillion as a trade surplus.
Pol Eco Analytics acknowledged that the recent development of an N6.94 trillion trade surplus demonstrates the resilience of Nigeria’s economy, but noted that trade surpluses are no guarantee of economic health, and neither do trade deficits guarantee economic weakness.
Adefolarin said, ” Nigerian economic policymakers should certainly be paying attention to cases where a pattern of extensive and sustained current fiscal imbalance has gone badly, as a cautionary way to align fiscal and monetary policy to stabilise prices.
“We need not remind the Nigerian authority that either trade surpluses or trade deficits can work out well or poorly, depending on whether the corresponding flows of financial capital are wisely invested.”
He said from a critical standpoint of economic development, the current situation in the country today, with real GDP growth averaging only about 2.6% per year, unemployment of 37%, and a poverty rate of 38.8%, has been creeping higher alongside the lingering cost of living crisis in the country should be a red flag for any economy.
Pol Eco Analytics, in the statement, said that as a stakeholder in the Nigerian economy and development project, the Nigerian authority must explore avenues to rectify this situation by taking appropriate measures to reduce the hardship in the economy in the face of a cheering trade surplus recorded in the first and second N6,435.13 trillion and N6.94 trillion 2024 respectively.
” In this regard, as a matter of national priority, we call on President Tinubu and his Economic team to critically invest in sectors of the economy that would strategically lead to an export-oriented economy as its government seeks a more strategic diversification and revenues from the oil and gas sector to help the growth and development of Nigeria’s economy.”
Meanwhile, the NBS, in its report, added that crude oil exports dominated Nigeria’s export trade, valued at N14,559.56 trillion, which represented 74.98 percent whereas non-crude oil exports stood at N4,859.37 trillion, which represented 25.02 percent of total exports Q2 2024 under review.
Consequently, non-oil products contributed N1,944.25 trillion or 10.01 percent of total exports.
The report concluded that the top trading export partners in Q2 2024 were Spain, the U.S., France, India, and The Netherlands. China remained Nigeria’s highest trading partner, followed by Belgium, India, the United States of America, and The Netherlands.
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