13 May The Impact of Covid-19 Pandemic on the Nigeria Economy
Generally, coronavirus (COVID-19) outbreak has already caused considerable human suffering and major economic disruption to the globe and this includes recent sharp reaction in financial markets to the spread of the coronavirus in late February; which has succeeded in increasing the persisting financial vulnerabilities from the tensions between slower growth, high corporate debt and deteriorating credit quality. It is also expected that trade and investment tensions will remain high and could spread further; because the expectation that the United States and China would remove all the remaining tariffs put in place over the last two years is uncertain. It should be recalled that the global financial crisis of 2008-2009 increased unemployment by 22 million, but a preliminary estimation of the rise in global unemployment as a result of Covid-19 stands between 5.3 million and 24.7 million from the base level of 188 million in 2019 (ILO, 2020).
How COVID-19 affects Nigeria’s Economy
Business activities have been disrupted globally as Covid-19 pandemic intensifies. It is evident that conferences across the world, sporting events, political rallies, economic transactions, have all been hampered by the pandemic virus. China has been the hub of business for hi-tech companies and the country has leveraged on this feature to become a global supply chain to other countries. However, evaluating the economic impact of COVID-19 on Nigeria from the lens of demand and supply-side cannot complete without mentioning the disruption of inputs from China and the global oil gluts.
The on-going disruption caused by the Covid-19 pandemic has plunged crude oil prices to fall below $20 per barrel. The oil price-war between Saudi-Arabia and Russia has also generated revenue shock to oil-producing countries, and the most vulnerable are the countries that are over-dependence on oil, like Nigeria. Poverty is relatively inevitable because currently the 2020 budget which was benchmarked on the crude oil price of $57 per barrel as suffered setback; and this will consequently reduce government expenditure.
If we summarize Nigeria economy as the composition of household consumption, investment by firms, government expenditure and net export, the emergence of COVID-19 will affects major contributors to GDP. The possible impacts are presented below.
The article gives an overall and succinct view of the impact of COVID-19 on Nigeria economy, which has shown a negative pattern more in terms of fall in aggregate demand and supply shock for a country that majorly depends on oil. However, the impact will hit the top 10 contributors to GDP more than other sectors; and the result is increase in The article gives an overall and succinct view of the impact of COVID-19 on Nigeria economy, which has shown a negative pattern more in terms of fall in aggregate demand and supply shock for a country that majorly depends on oil. However, the impact will hit the top 10 contributors to GDP more than other sectors; and the result is increase in unemployment and poverty rate.unemployment and poverty rate.