The COVID-19 pandemic has had severe impacts on the macroeconomy and the livelihoods of households globally. The restrictions to movement alongside the associated uncertainty stimulated a sudden decline in the demand for commodities and disrupted production, leading to the underutilisation of capital and labour. More specifically, as governments sought to curb the spread of the virus by implementing workplace and school closures, and encouraging social-distancing practices, these policies led to a significant impact on all economies. A recent study on the impact of COVID-19 on gross domestic product (GDP) and trade finds that the pandemic caused a 2% decline in global GDP, a 2.5% decline in the GDP for developing countries, and a 1.8% for industrialised countries.
For Nigeria, which saw its first case in February 2020, the economic contraction was severe and sustained leading to a recession in the third quarter of 2020. The economic contraction is the result of the adoption of lockdown measures – which had an impact on nearly all sectors of the economy – along with the pandemic’s impact on partner economies engaged in international trade and those providing foreign investment. Meanwhile, the income of the majority of citizens has been affected, because a large share of informal workers has no recourse to unemployment insurance or paid leave of absence.
This article was first published on SAIIA