Financial market analysts at FSDH Merchant Bank Limited have projected that Nigeria’s forex reserves will get to $67.13 billion in 2017.
FSDH made this prediction in a report titled: “Nigeria’s Economic Outlook: 2013-2017,” made available to THISDAY Thursday.
Nigeria’s forex reserves stood at $46.545 billion as at February 12, 2013, according to data obtained from the Central Bank of Nigeria (CBN).
However, the merchant bank pointed out that the general election to be held in 2015 as well as possible decline in oil price might adversely affect this projection.
According the report, strong external reserves position would continue to support a stable exchange rate in Nigeria.
This, it also noted: “Will also improve the country’s rating. This will help the country to access cheaper funding in the international market, which will also enable large companies operating in Nigeria to have access to cheaper long term funds in the international market.
“More foreign direct investments may also be redirected to Nigeria on account of the strong external reserves position.”
Commenting on the country’s foreign trade, it cited the latest foreign trade statistics released by the National Bureau of Statistics (NBS) as at September 2012, to have shown that the value of Nigeria’s merchandise trade had been on a progressive increase in the last few years with exports dominating the total trade at an average of 70.60 per cent of the total trade. This, it explained, meant that the economy had a trade surplus.
“In a similar pattern, oil dominates the exports at an average of 70.37 per cent. The total trade increased from N19.66 trillion in 2010 to N29.33 trillion in 2011. As at September 2012 the value of total trade stood at N20.89 trillion. Looking at Nigeria’s export partners, United States is on top of the list followed by Brazil and closely followed by China. On the other hand, China is Nigeria’s number one import partner followed by the United States while India occupies the third position.
“The implication of this is that any Nigerian Bank that engages in trade finance must have correspondent banks in these regions. Also, developments in North and South America, as well as Asia impact on Nigeria’s trade position and can have a pass-through effect on domestic prices and interest rates.
“Going forward, we expect the following factors to be the drivers of foreign trade in Nigeria,” the report added.
It stressed that the diversification strategy of the federal government from oil to non-oil, efforts to improve infrastructure in the country and make the country’s goods competitive would boost Nigeria’s exports during the forecast period.