The recently published World Economy Outlook (WEO) has indicated a decline in global growth. Due to the impact of COVID-19 pandemic, global growth has been projected to stand -4.9 percent. In Sub-Saharan Africa, a decline of -3.2 percent has been predicted. For Nigeria, economic contraction of as much as -5.4 percent is predicted.
While Nigeria’s economic outlook as predicted by WEO looks grim, there is a considerable correlation in the forecast by Nigeria’s economic team. In fact, the figures projected by WEO appears more modest; earlier, the National Economic Sustainability Committee predicted that Nigeria’s economic growth may decline by as much as 8.91 percent.
Common points in economic analysis on the impact of COVID-19 on Nigeria include a decline in economic growth, economic contraction, a recession, and a host of assaults on business and household incomes. Although Nigeria is not alone in this wave of economic challenges, the challenges pose serious threats to Nigeria’s present and future.
Since 2018, Nigeria has accrued marginal gains in economic growth. According to the trend obtained from WEO, Nigeria’s economic growth was 1.9 percent in 2018. In 2019, the figure increased to 2.2 percent. However, decline of -5.4 percent sets the nation far below the gains that have been recorded over time. However, WEO has suggested a possible rebound in Nigeria’s economic growth to 2.6 percent in 2021.
As convenient as it is to hope on the predicted economic rebound, it is predicated on a series of realities some of which may be beyond human control. While economic policies and readjustment measures may stir economic growth, the intensity of the pandemic may directly impact on growth. It appears that the fate of countries across the world is dependent on vaccine development and/ or discovery of an effective treatment method.
But the pandemic has continued to deal Nigeria blows on many fronts. On the economic front, the crisis has rocked government revenues at federal, state, and local levels. This has threatened wages, overheads, and capital expenditures at the three levels of government. The pandemic has also impacted on household income as well as on business. Job losses and inflation are other immediate effects of the pandemic.
To reduce the effect of the pandemic, Nigeria has developed a sustainability plan. Despite the identified loopholes in the plan, it is a position to provide some cushioning for citizens and businesses who have been hot by the pandemic. However, as businesses resume and the economy reopens, there is a need to increase commitment to the sustainability plan and provide more cushioning to stimulate economic growth.
For the economic reopening phase that Nigeria is gradually at, the World Bank has recommended targeted support to the most impacted businesses and groups. Economic policy should be introduced to cushion income losses among households and businesses. Liquidity assistance and stimulus should also be provided as required. These recommendations can be integrated into the sustainability response of government at federal and state levels.