In his recent presidential address on the COVID-19 outbreak, President Buhari ordered a ban on movements in Lagos, Ogun and the FCT for an initial period of 14 days with effect from 11 pm on Monday, 30th March 2020, to curb a further spread of coronavirus in the country.
Clearly, the lockdown will have a negative economic impact on Nigeria and its citizens. This
implies that domestic economic activities in Q1 and Q2 2020 may contract. However, with strict adherence to the lockdown as ordered by the President, economic recovery in the post-pandemic period may be “V-shaped”, with the trough in Q2 (lockdown period) and a quick recovery in H2. This is benchmarked on the Chinese experience. Specifically, China was able to ease its lockdown policy after 2 months, reviving economic activities in the country afterwards.
However, if poorly managed, Nigeria’s recovery may be “U-shaped” meaning that the recovery could be delayed until late 2020. More so, there is a considerable risk that the economy could be heading for a “W-shaped” recovery, meaning that the economy swings through a trajectory of ups and downs over a two year period due to domestic and global instability as countries around the world struggle to contain the virus at the same time. Give or take, our base case estimate sees economic activities rebounding in Q3 to early Q4 2020 on assumption that concerted effort of governments around the world will help flatten the curve of the outbreak over the next two months.
United Capital Research
