Nigeria’s all commodity terms of trade (ToT) fell by 0.25 per cent in the fourth quarter of 2021, with commodity trade declining 0.33 per cent during the period.
The decline, contained in the National Bureau of Statistics (NBS)’s Commodity Price Indices and ToT for Q4’21 released on Monday, represents the fourth consecutive quarterly decline in commodity ToT this year.
In Q1’21 commodity ToT declined by 0.51 percent and by 0.35 percent in Q2’21 and down by 2.85 per cent in Q3’21 (highest decline of the year).
The terms of trade (TOT) represent the ratio between a country’s export prices and its import prices.
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 NBS said:”The All Commodity ToT for October, November and December, 2021 stood at 102.34 per cent, 102.51 per cent and 102.09 per cent respectively.
“The All commodity group terms of trade increased by 0.16 per cent in November and declined by 0.41 per cent in December resulting in a decline of 0.25 per cent between October and December, 2021.
“The average decrease in prices in quarter 4, was caused by decreases in Products of the chemical and allied industries (-0.42), this was followed by mineral products (-0.26) and animal and vegetable fats and oils and other cleavage products (-0.19).
On commodity export, the report stated:”The All commodity group export index averagely decreased by -0.33 per cent between October and December, 2021. This is due to decreases in the prices of Products of the chemical and allied industries (-0.51), mineral products (-0.34), and animal and vegetable fats and oils and other cleavage (-0.26).
“Conversely, between October and November 2021, the All commodity export index increased marginally by 0.03.This was driven by decreases in prices of live animals; animal products (-0.48), and animal and vegetable fats and oils and other cleavage (-0.27) and was positively affected by products of the chemical and allied industries (+0.17), vegetable products (+0.04).
On imports, it stated: “The All commodity group import index increased by 0.47 per cent between October and December, 2021.
“This was driven mainly by an increase in the prices of products of textiles and textile articles (+0.62), boilers, machinery and appliances; parts thereof, (+0.61), and wood and articles of wood, wood charcoal and articles (+0.59). “