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Journal Articles Resources Policy Year : 2021

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

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.
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Dates and versions

hal-03344118 , version 1 (14-09-2021)
hal-03344118 , version 2 (19-11-2021)

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Théophile T Azomahou, Njuguna Ndung'U, Mahamady Ouedraogo. Coping with a dual shock : the economic effects of COVID-19 and oil price crises on African economies. Resources Policy, 2021, 72, pp.102093. ⟨10.1016/j.resourpol.2021.102093⟩. ⟨hal-03344118v2⟩
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