Coping with a dual shock: The economic effects of COVID-19 and oil price crises on African economies

Théophile T. Azomahou, Ndung’u, Njuguna and Mahamady Ouédraogo

Resources Policy, 2021, vol. 72, issue C

Abstract: Oil-dependent countries face a twin-shock: in addition to the COVID-19 outbreak, they are facing an oil price collapse. In this paper, we study the impact of this dual shock on the forecasted GDP growth in Africa using the COVID-19 outbreak as a natural experiment. We use the IMF World Economic Outlook’s GDP growth forecasts before and after the outbreak. We find that COVID-19 related deaths result in -2.75 percentage points forecasted GDP growth loss in the all sample while oil-dependence induces -7.6 percentage points loss. We document that the joint shock entails higher forecasted growth loss in oil-dependent economies (-10.75 percentage points). Based on oil price forecasts and our empirical findings, we identify five recovery policies with high potential: social safety net policy, economic diversification, innovation and technological transformation, fiscal discipline, and climate-friendly recovery policy.

Keywords: COVID-19; Oil-dependence; Growth forecast; Africa (search for similar items in EconPapers)
JEL-codes: I15 O47 P28 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:72:y:2021:i:c:s0301420721001070

DOI: 10.1016/j.resourpol.2021.102093

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