Background Information: How could we have saved the global economy of this current turmoil when the health crisis that started in China was not nipped in the bud until it metamorphosed in serious global threat that is capable of plugging world economies into recession? We have all failed to learn from history globally and nationally. It is worthy of note that Nigeria escaped the adverse and contagious effects of the GFC in 2008/2009 due to huge external reserves - which in fact reached over $60bn as this period marked a rapid rise in crude oil prices (in excess of $100pb) while the stock market ASI was as high as 51,000 points. Now, the country has lost the necessary shock absorbers as external reserves are currently below $36bn, oil prices are down below $30pb and NSE ASI is currently in bear market territory. Faced with continued depletion in external reserves, the CBN devalued the Naira at the interbank forex market to N360/$ from N306/$ to serve as succour for portfolio investors, while ignoring the impact of the devaluation policy on an high importing country Nigeria. Our crude is no longer in demand by our major trading partner - India due to shutdown of industrial activities arising from the pervasiveness of the deadly epidemic. How do we get out of this current mess? As Nigeria clocks 60 this year, what notable achievement has the country recorded despite the fruitless efforts towards economic diversification since 1960?
Nigeria is more vulnerable than ever given the strong linkage of the economy to the global economic environment through basically the trade and investment channels. We have weaker economic fundamentals now than was the case during the great recession in 2008-09.
· The new corona virus, which first emerged in the Chinese city of Wuhan last December, has infected more than 600,000 people in at least 180 countries and territories globally, according to the World Health Organization. The virus outbreak has become one of the biggest threats to the global economy and financial markets. It will slow down the world’s second-largest economy and drag down the global economy along the way. Nigeria is no exception
You have raised a very important question as the coronavirus pandemic heightens the concerns of many with regards to its potential impacts on the global economy. I do strongly agree with you that the pandemic is likely going to have more damaging consequences in developing economies like Nigeria especially in the following regards;
1. There's likely going to be a huge distortion in Nigeria's overall revenue. Currently, Nigeria is still an oil-dependent economy and as such the nation stands to be hit hard due to this pandemic. Aside from the fact that crude prices are dropping with no high prospect of any recovery in short time, China which is the epicenter of the outbreak is one of the major consumers (importers) of the Nigerian crude export. Thus the current blow to the Chinese economy might leaves us with significant shake!
2. It most likely that even if the nation does all that is in it capacity to avoid recession or at best to properly manage such situation, it is still unlikely that the nation can meet up with its economic targets in the interim. For instance, the 2020 budget is already affected by the performance of the oil market. How to keep up with the blotted recurrent expenditures plans would be the priority of government as it is currently. This might directly imply the suspension of some critical capital projects outlined by the government for starting or completion especially in the absence of adequate external financing.
3. A huge proportion of the population is still highly vulnerable to the socioeconomic hardships that the pandemic poses to fragile economies like Nigeria considering the level of poverty and unemployment in such nations. Thus, many citizens would expect drastic actions to be taken such as doling out financial stimulus in the likeness of what is obtainable in some advance economies. However, such action must be carried out with utmost diligence in fragile economies like ours due to the weakness of the real sector.
The IMF has released its revised World Economic Outlook for 2020. Africa's largest economies are expected to get entrapped in recession for FY'2020; while Nigeria is projected to slip into recession since 2016, South Africa is not expected to recover from its current recession (Find attached file below for more information).
- Badges
- Science topic
- Similar topics
- Political Science
- International History and Politics
- Globalization