Follow Us on Google
By Chinwendu Obienyi
Following the moderation in trade deficit and service payments which slowed Nigeria’s Current Account (CA) deficit in the first half (H1) of 2021, the country’s CA deficit is expected to settle at $7.74 billion at the end of 2022.
This is even as they projected that there would be further pressure on the Naira which could see it being devalued by the Central Bank of Nigeria (CBN).
This was the view of analysts at Cordros Capital in their outlook for the country’s indices in 2022 in a report titled; Nigeria in 2022: Traversing the Murky Recovery.
Nigeria’s CA deficit had narrowed in H1-21, driven by the favourable trade position in Q2-21 as the trade balance ($1.06 billion) returned to a surplus position for the first time since Q3-19 ($2.96 billion).
The analysts noted that asides from the trade balance, lower services payments compared to pre-COVID levels provided another layer of support for the improvement in the external sector account when compared to FY 2020.
“Specifically, the deficit in the services account, as of H1 2021 ($7.61 billion), was 3. 6 per cent below $7.89 billion recorded in Q1 2020 stand-alone and 52.5 per cent below pre-pandemic levels.
“Elsewhere, current transfers increased by 17.9 per cent year-on-year (y/y), resulting in a significant moderation of the current account deficit to $2.52 billion (H1 2020: $8.09 billion deficit).
“Over 2022FY, we expect the CA deficit to widen, albeit marginally.”
