Ongoing trade war between the United States and China may adversely affect the implementation of Nigeria’s 2019 budget, analysts have said.
Since Nigeria is not an island, but part of the global village, the country is not insulated from happenings around the globe.
It reflects an African saying – “‘When two elephants fight, it is the grass that suffers”
The fear of analysts at FSDH, is that, if the fight lingers, it may reduce the demand for crude oil and consequently lead to a decline in the price of crude oil. US and China account for about 34 per cent of the total demand for crude oil.
“A lower crude oil price may reduce the revenue for Nigeria and also have a negative impact on foreign exchange stability and the interest rate”, said FSDH.
The Energy Information Administration (EIA) forecasts a lower average Brent crude oil price in 2019 than in 2018. A decline in the crude oil price below US$60/b could
affect the implementation of the 2019 Nigerian budget, which is premised on a $60/b benchmark. In turn, this could affect the three per cent performance of the Nigerian economy.
The US-China trade war has led to a decline in trade between the two countries as both American and Chinese importers have turned to other countries such as Mexico, Japan and Brazil, to meet their import demand for commodities such as soybeans, beverages and rubber.
These other countries are perhaps the major gainers in the US-China trade war as they have been able to increase their trade activities. If Nigeria had the capacity to produce the volume that met international standards and at competitive prices, it may have been able to partake in the opportunity that the US-China trade war presented. It may have been one of the ‘other countries’ America and China turn to for their import demands.
