Asia FX moves little with focus on US-China trade, dollar steadies ahead of CPI
Investing.com -- Bank of America (BofA) has warned that Nigeria and Angola could face economic risks if oil prices drop. Both countries currently manage moderate fiscal deficits and current account surpluses with an oil price at $70 per barrel.
However, these nations could be at further risk due to the increasing global oil supply and the possibility of sustained lower oil prices.
Among the two, Angola faces a higher risk as it has fewer foreign exchange (FX) buffers and more debt repayments than Nigeria. Nigeria, however, is slightly less dependent on oil than Angola.
The hydrocarbons sector contributes less than 10% to Nigeria's GDP, half of its fiscal revenues, and 95% of its exports. In contrast, in Angola, hydrocarbons account for 30% of GDP, 60% of revenues, and 95% of exports.
If oil prices were to fall to $60 per barrel, Angola's current account could turn into a deficit of -4.3% of GDP. Nigeria, on the other hand, would continue to have a surplus in its current account.
Nevertheless, if large errors and omissions in the balance of payments are taken into account, Nigeria could also end up with a deficit.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.