SUN 09 JAN, 2022-theGBJournal- According to the Central Bank of Nigeria (CBN), Nigeria’s Current Account (CA) printed a surplus position for the second consecutive quarter in Q3-21.
The CA surplus settled at USD3.68 billion in Q3-21 (Q2-21: USD348.88 million on account of higher trade balance surplus (USD1.77 billion vs Q2-21: USD307.01 million) lower net outflows from the service account (USD2.51 billion vs Q2-21: USD3.15 billion).
The higher trade balance surplus was primarily due to an 11.6% q/q decline in imports in line with the slowdown in non-oil (-17.1% q/q) imports.
At the same time, we attribute the lower net outflow from the service account to the impact of CBN’s FX demand management strategies and delta variant of the pandemic, which led countries to reinstate stringent measures to limit the movement of people.
We now expect the CA deficit to settle at USD4.50 billion or 1.0% of GDP in 2022FY (2021E: USD2.25 billion surplus).
Our forecast is hinged on expected pressure in the service account in line with expected increased global mobility and CBN’s gradual relaxation of FX demand management strategies.
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