Economic research - The rapid outbreak of the COVID-19 presents an alarming health crisis that the world is grappling with. In addition to the human impact, there is also significant economic, business and commercial impact being felt globally.
As viruses know no borders, the impacts will continue to spread. In fact, 94 percent of the Fortune 1000 across the globe, and businesses in Nigeria have been impacted and are already seeing COVID-19 disruptions. We expect that the COVID-19 threat will eventually fade, as the Ebola, Zika, and Severe Acute Respiratory Syndrome (SARS) viruses have in recent years. However, social-economic impact will still be felt long after virus fades.
Impact of Covid-19 on Nigeria
Nigeria, like all the nations of the world, is navigating uncertain times. However, for Nigeria, as an oil-dependent economy, this is a Twin Shock: COVID-19 Pandemic Global & Domestic Shock, and Oil Price Shock.
Nigeria’s vulnerabilities to the impact of these external shocks can be adduced to increased dependencies on global economies for fiscal revenues, foreign exchange inflows, fiscal deficit funding and capital flows required to sustain the nation’s economic activities.
The Twin Shocks are expected to impact the economy through three channels: supply, demand and financial.
The Supply Channel
In 2019, Nigeria’s imports from China was N4.3trillion (25 percent of total imports), while imported manufactured goods took up about 70 percent of total imports. This is likely to be affected as China and the rest of the world have resorted to closing down factories, imposing travel bans and even total country lock-downs, as they struggle to contain the spread of the virus. This could put more pressure on inflation numbers (12.2 percent year on year as at February 2020) going forward as cost of local production goes up.
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