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All-region terms of trade decreased by -0.79% in 2Q2020 over weaker trade

BY David Oladele

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Nigerian Banks and weaker trade
Marina, Lagos

The National Bureau of Statistics (NBS) has reported that all-region terms of trade decreased by -0.79% due to weaker trade with Europe, Africa, and Asia during the half quarter of the year.

The NBS, in the report, published on its official website, showed that Nigeria’s major trading partners in Q2 2020 were Spain, The Netherlands, China, India, and France.

Read the rest of the report below:

Between April and June 2020 (Jan 2018=100): The All commodity group import index increased by 0.16%, driven mainly by an increase in the prices of Footwear, headgear, umbrellas, sunshades, whips, etc.

The All commodity group export price index fell by -0.63 % due to a significant decrease in the price of Boilers, machinery, and appliances.

The All products terms of trade (TOT) index decreased marginally by -0.79% as a result of the decline in the prices of Boilers, Machinery, and chemical appliances; Footwear, headgear, Umbrellas Sunshades, Whips as well as Raw hides and skin.

The All region group export index decreased by -0.63% due to decreases in the prices of exports to all regions, except Africa.

The All region group import index increased by 0.16%% due to marginal increases in the prices of goods from Africa and Asia.

All region terms of trade decreased by -0.79% due to weaker trade with Europe, Africa, and Asia during the period.

Nigeria’s major trading partners in Q2 2020 were Spain, The Netherlands, China, India, and France The major exports to these countries were crude petroleum and natural gas.

The major imports from these countries were Motor spirits, motorcycles and herbicides / anti sprouting products.

The terms of trade (TOT) represent the ratio between a country’s export prices and its import prices.

The ratio is calculated by dividing the price of the exports by the price of the imports, usually in percentage terms.

An increase in the terms of trade between two periods (or when TOT is greater than 100%) means that the value of exports is increasing relative to the value of imports, and the country can afford more imports for the same value of exports.

For example, an increase in the price of oil between two periods (with oil production remaining the same) is likely to increase or improve the terms of trade for Nigeria and vice versa.

The TOT is recorded as an index, and can be used as an indicator of an economy’s health.

The All commodity group import index rose by 0.16% between April and June 2020. The index was driven by an increase in the prices of Footwear, headgear, umbrellas, sunshades, whips (5.52%), Raw hides and skins, leather, furskins, etc.; saddlery (5.28%), Pearls, precious and semi-precious stones, precious metals (3.71%).

It was, however, negatively affected by Prepared foodstuffs; beverages, spirits, and vinegar; tobacco (-4.60%), Live animals; animal products (-1.94%), and Articles of stone, plaster, cement, asbestos, mica, ceramic (-1.36%). Between April and May 2020, the All commodity group import index rose by 0.84%.

 During this period, the index was driven by higher prices of Footwear, headgear, umbrellas, sunshades, whips, etc (2.76%), Raw hides and skins, leather, furskins, etc.; saddler(2.67%), Pearls, precious and semi-precious stones, precious metals (1.87%), and miscellaneous manufactured articles (1.62%).

However, the rise was offset by decreases in the prices of Articles of stone, plaster, cement, asbestos, mica, ceramic (-0.68%), Live animals; animal products (-0.50%), as well as Vehicles, aircraft, and parts thereof; vessels, etc (-0.34%) amongst others.

Between May and June 2020, the All commodity group import index fell by -0.68%, driven by a decline in prices of Prepared foodstuffs; beverages, spirits and vinegar (-5.06%), Live animals; animal products (- 1.44%), Mineral products (-1.09%) and Vegetable products (-0.37%).

This was offset by increases in the prices of Footwear, headgear, umbrellas, sunshades, whips, etc (2.76%), Raw hides and skins, leather, furskins, etc.; saddlery (2.60%), Pearls, precious and semi-precious stones, precious metals (1.84%), and miscellaneous manufactured articles (1.59%).materials(-6.02%).

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