Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 26)

Crude oil price increased to the highest since 2019 while external reserve decreased in the week under review. The price of Nigeria’s bonny light increased by 3.5 percent to an average of $76.4 per barrel in the week under review.3 Despite the increase, external reserve fell by $246.9 million to an average of $33.59 billion. External reserves have been depleting since May 2021.4 The main source of foreign exchange earnings is from crude oil and an increase in crude oil price should be reflected in the external reserves. However, the increase in crude oil prices does not translate into increase in external reserves and revenue as Nigeria sells crude oil on contract.5 While crude oil prices are exogenous to the Nigerian economy, the rise in crude oil prices eventually will improve government revenue and external reserves. Furthermore, the depleting external reserves implies that the Nigerian economy is still heavily dependent on imports and reveals the importance of diversifying the Nigerian economy.

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