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

Théophile Azomahou, Njuguna Ndung'U and Mahamady Ouedraogo
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Théophile Azomahou: AERC - African Economic Research Consortium
Njuguna Ndung'U: AERC - African Economic Research Consortium

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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: Africa; growth forecast; oil-dependence; COVID-19 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cwa, nep-ene, nep-isf and nep-mac
Note: View the original document on HAL open archive server: https://hal.science/hal-03344118v2
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Citations: View citations in EconPapers (4)

Published in Resources Policy, 2021, 72, pp.102093. ⟨10.1016/j.resourpol.2021.102093⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03344118

DOI: 10.1016/j.resourpol.2021.102093

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