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

Author

Listed:
  • Théophile T Azomahou

    (AERC - African Economic Research Consortium)

  • Njuguna Ndung'U

    (AERC - African Economic Research Consortium)

  • Mahamady Ouedraogo

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

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.

Suggested Citation

  • Théophile T Azomahou & Njuguna Ndung'U & Mahamady Ouedraogo, 2021. "Coping with a dual shock : the economic effects of COVID-19 and oil price crises on African economies," Post-Print hal-03344118, HAL.
    • Handle: RePEc:hal:journl:hal-03344118
    DOI: 10.1016/j.resourpol.2021.102093
    Note: View the original document on HAL open archive server: https://hal.science/hal-03344118v2
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    References listed on IDEAS

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    Keywords

    Africa; growth forecast; oil-dependence; COVID-19;
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