Experts have predicted that the Nigeria’s current account deficits will surge to $20.0 billion by the end of 2016 and recover to $14.6 billion in 2017, equivalent to 4.2 per cent and 3.1 per cent of gross domestic products, GDP, respectively.
This projection was made as a result of the decline in crude oil prices that has continued to take a toll on Nigeria’s balance of trade.
Current account deficit is a measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services it exports.
Analysts at FBN Quest, in a report made available to Thisday, stressed that a turnaround in the current account hinges upon a marked recovery in the oil price, “which we do not see before 2018, and/or significant import compression as a result of substitution policies.”
Recent numbers released by the National Bureau of Statistics showed that Nigeria’s current account deficit eased to -$2.01 billion in the fourth quarter of 2015 or 1.5 per cent of quarterly GDP.
Net investment flows on the financial account were negative, at $1.13 billion, but net errors and omissions of $3.14 billion covered the gap.
The experts posited that the once compelling argument for portfolio investment has been undermined by the emergence of sizeable delays in repatriations and by the CBN’s exchange-rate policies.
“We are waiting to see what it has in mind in terms of greater “flexibility.” Other inflows consist largely of loans and deposits. On the flows, Nigeria remains a contender for steady if unspectacular Foreign Direct Investment (FDI) on the grounds of demographics and consumption potential,” they added.