The Renaissance Capital Limited (RenCap) has reported that the anticipated decline in the price of crude oil this year may have a negative effect on the amount of goods and services consumed in the country.
The Lagos based financial advisory firm predicted this in a report titled: “Sub-Saharan Africa: Weaker Commodity Prices -Implications for Consumption”.
Oil price had been estimated to fall by about four per cent this year and to be broadly flat in 2014, according to Bloomberg’s consensus forecasts for Brent crude.
The report showed there was a strong correlation between oil price and Nigeria’s terms of trade index.
It further declared Nigeria’s terms of trade index (ratio between export and import unit value indices) was highly correlated with the price of African Bonny Light crude oil, one of the main types of oil produced in Nigeria.
According to RenCap, Nigeria’s worsening terms of trade index in 2013 implied a decline in the volume or quantity of imported goods that the country would be able to acquire.