Commodity Price Indices and Terms of Trade (Q2 2018)

Commodity Price Indices and Terms of Trade
(Q2 2018)

The terms of trade (TOT) represent the ratio between a countrys export prices and its import prices. The ratio is calculated by dividing the price of the exports by the price of the imports, usually in percentage terms. The terms of trade for Nigeria are calculated as the value of its exports as percent of the value of its imports. 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 TOT is recorded as an index, and can be used as an indicator of an economys health.

Data source: National Bureau of Statistics


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