Financial analysts at United Capital have said that they expect further upticks in trading activities supported by improvements in economic activities and the volatility in the Foreign Exchange market.
The analysts stated this in their economic note tagged ‘Q2-2024 Foreign Trade in Statistics Report seen by NewsNGR.
They noted that export receipts will remain elevated due to the expected sustained crude oil prices.
In addition, they said the recent improvements in crude oil production (returning to first quarter of 2024 levels) owing to oil theft recoveries and pipeline discoveries will bolster increases in export bills.
“Nevertheless, we reiterate the need for the government to diversify the economy’s export proceeds sources given the age-long vulnerability of export proceeds to shocks in the crude oil market,” they said.
According to the analysts, taking a dive into the numbers revealed that total exports grew by 201.8 per cent year on year to N19.4trn, driven by higher crude oil exports as demand for crude oil remained strong.
“In addition, higher crude oil prices supported the growth in export value as the average Brent Crude oil price climbed by 4.0 per cent quarter on quarter and 9.4 per cent year on year to $85.03/barrel in second quarter of 2024 from $81.76/barrel and $77.73/barrel in first quarter of 2024 and second quarter of 2024, respectively.
“Interestingly, crude oil exports contributed 75.0 per cent of the total export bills as Nigeria made N14.6trn from crude oil exports, up 190.9 per cent year on year.
“However, crude oil export receipts declined by 6.0 per cent quarter on quarter due to low production levels recorded in Q2-2024.
“According to the Q2-2024 Gross Domestic Product (GDP) report by the NBS, Nigeria’s crude oil output fell from 1.57 millions of barrels per day (mbpd) in first quarter of 2024 to 1.41mbpd in second quarter of 2024,” they said.
The analysts noted that the proportion of the country’s non-oil exports to total exports increased from 19.2 per cent in first quarter of 2024 to 25 per cent in second quarter of 2024, indicating some progress in the country’s efforts to diversify its FX earnings.
They noted that the critical factor driving the increase in trade numbers was the depreciation of the Naira over the period.
“On the other hand, import bills expanded to N12.5trn in second quarter of 2024, up 97.9 per cent year on year from N6.3trn, largely due to improved local demand for imported goods.
“In addition, we note that the global inflationary environment was broadly elevated, impacting the nominal value of trade activities and, consequently, Nigeria’s imports.
“Key import partners included China, Belgium, India, the United States, and the Netherlands, with major commodities traded being motor spirit ordinary, gas oil, durum wheat, butanes, and cane sugar meant for sugar refinery,” they said.