A season of gloomy forecasts
The Covid-19 pandemic has dealt a huge blow to the global economy. What is fundamentally a public health crisis has led to economic recessions of historic proportions in several economies drawing comparisons with the Great Recession of this century and the Great Depression of the prior century.
Estimates by the IMF in its June 2020 World Economic Outlook (WEO) forecast a sharp contraction of 4.9% in global output, with variations across different regions as advanced economies (AEs) are forecast to be the worst hit at -8% while emerging markets and developing countries (EMDEs) are forecast to witness a 3% decline. In the same vein, global demand for crude oil has tumbled – as economic activities retreated to a near halt due to lockdown measures imposed to flatten the Covid-19 curve – adversely impacting global crude oil prices. The severity of the shock in the crude oil market is reflected in the incidence witnessed during the early phase of lockdown where WTI crude nosedived into negative territory, trading at -$37 per barrel on April 20th, an occurrence which has understandably perplexed observers as it was never experienced in history.
According to data from the Budget Office, crude oil was about 62% of government revenues and 77% of export earnings in 2019. Thus, Nigeria has found itself grappling with a dual crisis – an oil crash and the pandemic with all its attendant…
