Macroeconomic adjustments to Russia–Ukraine war‐induced energy prices shocks in sub‐Saharan Africa: Effects based on countries' resource status

Shakirudeen Taiwo, Josine Uwilingiye and Kwame Osei‐Assibey

African Development Review, 2024, vol. 36, issue S1, S59-S74

Abstract: The Russia–Ukraine crisis has significantly disrupted global supply chains, leading to sharp oil and natural gas price increases. These energy price surges have impacted productivity in sub‐Saharan Africa (SSA), with potential long‐term effects on purchasing power and economic growth. Additionally, the crisis has highlighted varying impacts of commodity price shocks across the region due to country‐specific conditions, which prompted this study to examine how energy price shocks influence macroeconomic performance in SSA based on countries' resource status. This study utilised a quarterly dataset of macroeconomic variables—real gross domestic product (GDP) (rGDP), inflation and exchange rates—across 21 SSA countries, along with crude oil and natural gas prices. The Bootstrap Granger Causality test confirmed a long‐run relationship between energy prices and these macroeconomic variables. Furthermore, the Panel Structural Vector Autoregressive model demonstrated varying spillover effects based on countries' resource status. The results indicate that resource status significantly affects the magnitude and nature of energy price shocks on macroeconomic variables. Specifically, oil‐rich nations experience the most intense effects, followed by other resource‐endowed countries. These findings offer a nuanced understanding of the complex dynamics triggered by the Russia–Ukraine crisis in the SSA region, highlighting the critical role of resource endowment in shaping economic resilience.

Date: 2024
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