Nigeria’s current account is expected to hit a surplus this year, according to estimates by the research and analysis division of the Economist Group, The Economist Intelligence Unit (EIU).
The upward movement projection by the London-based firm is on the back of its expectation of higher crude prices in 2022.
“Trends support our forecast for a current-account surplus in 2022,” research analysts at EIU said.
A country’s current account records the value of exports and imports of both goods and services and international transfers of capital. It is one of the three components of its balance of payments, the others being the capital account and the financial account.
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Nigeria recorded a current account deficit of $424 million in the second quarter of 2021, dropping to its lowest level in over two years. This is according to data on Nigeria’s balance of payment from the Central Bank of Nigeria (CBN).
While the balance of payment of Africa’s largest economy continues to trail in the negative, it dropped by 87 percent compared to a deficit of $3.27 billion recorded in the same quarter of 2020. That was a slow down by 79.8 percent when compared to the $2.1 billion deficit recorded in the first quarter of 2021.
“Global oil prices are currently hovering close to US$80/barrel, and our projection is for an average price of US$74.1/b for the year as a whole,” EIU said.
The Unit also assumed that the technical issues that held back crude production in 2021 will subside, resulting in higher output, and as a result, it expects a new fuel mega-refinery to begin production in 2022, which over time will boost net exports as Nigeria’s import requirement for fuel diminishes.
“Although the main impact is expected to be in 2023, when we expect local petrol prices to be liberalised, post-elections. The refinery will also be able to supply the regional market,” EIU said.
