Recession Caused by COVID-19 in Nigerian Economy
It is no doubt that recession is certain after the world combats the COVID-19 pandemic. A virus which is immensely eaten deep into the fabrics of various sectors of the globe causing uncertainties and disorder in supply chain. Counting down from; Tourism, Aviation, Infrastructural, Health, Financial and the economy at large. Nigeria just like other countries of the world is having her own share of the pandemic.
I believe that the fallouts of the COVID-19 pandemic compare to the 2007-08 recession, will lead to worst outcomes. Hence, the urgent need for a global ceasefire. And the world to channel all efforts and workforces towards combating this dreaded virus. For a few countries or states where the virus has not been recorded, there are also the need for an enormous awareness campaign and sensitization programs in other to ensure total prevention of the pandemic in such places.
The 2007-08 recession, when compared with the imminent/ongoing recession caused by the COVID-19, can be said to be “a tip of the iceberg”. The 2007-08 global recession notably, was caused by the Subprime mortgage crises in the United States and was majorly on economic-based issues.
In Nigeria and so many other countries, the uneconomical uniqueness of the COVID-19 respiratory illness has played a huge part in the number of sectors that are being drastically affected. Sectors like the Aviation sector, Health, Infrastructural, Tourism, Industrial, Educational, Banking and Finance are all at the receiving end of the Pandemic. The total lockdown being implements in some states in Nigeria as well as some other countries globally has resulted in massive reduction in hotel reservations, reduced discretionary spending by customers, et cetera.
With the spread of COVID-19 across the globe, there was obvious tension in gold, bonds, and prices of other commodities. These factors mapped out predictions of major economic damage from the outbreak. Lots of respective financial markets has been rapidly descending uncontrollably. Despite the efforts of emergency injections since the global financial crises announced by numerous central banks across the globe.
While the 2007-08 recession was recorded to have affected many countries’ economies, it was still insignificant and to a large extent manageable. The fallouts of the COVID-19 respiratory illness are not only being experienced globally, but have also affected almost all the sectors of the global economy. Also leading to total lockdown in many countries of the world and might just linger into the second quarter of 2020, with its vaccine yet to be known “officially”.
With the recession in view, there is need for earnest continues fight against coronavirus pandemic continues globally. Although there have been numerous efforts by both governments, independent economic experts and financial institutions in other to checkmate its negative impacts in the economy of their respective countries. There is however indefinite steady decline in global economic activities. Global markets are undoubtedly experiencing enormous setbacks.
A setbacks that has not been experienced since 2007-08, which was when the last global economic recession was experienced. Nations through their various economic regulatory bodies have been reducing interest rates, formulating and implementing economic policies and imploring other strategies in other to limit economic upsets being experienced.
It is indeed undebatable that a global recession is imminent. And low income based nations not excluding new/developing markets all over the globe will suffer its impacts the most. However, it is a call to action that the world should genuinely synergize and work together to stop the spread of the coronavirus respiratory illness. The fast pace in the stoppage of the virus globally will determine how quickly the recovery rate will be and how fast confidence will return to the respective markets.
Many global Economist on coronavirus pandemic leading to a global recession. Renowned economists globally have been airing their thoughts on the subject matter. The majority of them have consistently reduced their growth outlook in the previous month and added to their prediction certainty for a recession in major global economies.
David Mann (Global Chief Economist), in his view, stated; “The impact of COVID-19 now extends much beyond China and its trading partners to the rest of the world, hitting major economies like the European Union and the US. We face the risk that the virus shock may persist – with outbreaks resuming in places that had brought the situation under control – or that we see major credit shocks, despite government interventions to limit economic upset and mass layoffs.
In this context, we predict global growth at 1.6 percent for 2020, falling to levels not seen in 37 years (excluding the Global Financial Crisis). The second quarter is likely to be the worst for global growth as US and Europe disruptions hit a slowly recovering China. We foresee a global recession in the first half and a gradual recovery in the second.
We had originally expected growth to stabilize in 2020, supported by China’s fiscal stimulus, the lagged effect of last year’s rate cuts from central banks, inventory rebuilding and a global trade recovery. All of these support factors have now been delayed, and the loss to this year’s growth caused by COVID-19 will push the global economy into recession, in our view. “We predict global growth at 1.6 percent for 2020, falling to levels not seen in 37 years”.
Considering the total lockdown in some states in Nigeria, tourism and airlines completely battered and the disruption of almost all the sectors of the economy. An act which is resulting to reduced economic activities in the country, it is not far-fetched to conclude that Nigeria is already in recession. The COVID-19 respiratory illness is already exhibiting some far worst fallouts when compared to the 2007-08 recession. With the nation still striving to recover from the 2016 economic recession caused by lack of adequate earnings in foreign exchange to meet imports and also downfall in the global oil price.
And also with the country being rated as the world’s poverty capital with an estimated 87 million people surviving on below $2 a day benchmark. And the National Bureau of Statistics (NBS) last released report ranking Nigeria in 21st amongst 181 countries with an unemployment rate of around 23.1%. It is no doubt that Nigeria, African countries and others countries of the world with emerging markets or low-income based markets are in for a huge economic shock.
Looking at the good side however, it is paramount that the Nigerian government should learn from the lessons of the previous recessions. Moving away from the monolithic dependent on oil as it’s no longer profitable for economic drive. And through her policymakers and independents economic experts, being fully aware that the major approach in saddling through these present COVID-19 fallouts (Recession) is by genuinely leading economic diversification drive. Hence formulating and implementing laws and policies that favor it.