Elsevier

Resources Policy

Volume 72, August 2021, 102093
Resources Policy

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

https://doi.org/10.1016/j.resourpol.2021.102093Get rights and content

Highlights

  • We study the impact of COVID-19 and oil price crises on African economies.

  • We use natural experiment framework.

  • We document that the joint shock entails higher forecasted GDP growth loss.

  • We identify six promising recovery policies.

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.

JEL classification

Codes
I15
O47
P28

Keywords

COVID-19
Oil-dependence
Growth forecast
Africa

Cited by (0)

Acknowledgments: This study has benefited from lengthy comments of one anonymous referee and the editor Gary Campbell. We are grateful to Charles Kofi Owusu, Lorry Symington, and Marina Amoah for their valuable comments and suggestions. The usual disclaimer applies.

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