The great lockdown has become a shutdown according to Martin Wolf the World-renowned economist. The global economy is virtually on a cliff and you in Nigeria must be wringing your hands and saying what the heck… is going on.
But here is the thing. The probability of COVID-19 killing you in Nigeria is .0019 in one based on a correlation coefficient of 0.68 between the Median age of 18, the life expectancy of 53.5 and a COVID-19 fatality. In other words, you are more likely to be killed by a lightning strike, hunger or malnutrition than this virus if you are in a village in Warri, Mubi or Mbano.
The model predicts a mild to moderate attack in Nigeria of 50k – 100,000 infections with 208 – 734 fatalities in a downside scenario. Remember that malaria kills approximately 300,000 Nigerians in one year.
Coming back to the economy, the ‘Great Lockdown’ has left the global economy in a virtual state of paralysis and necessitated countries rolling out various stimulus packages to combat the downturn. On average, advanced economies have committed 12% of their GDP to mitigate the fallout of COVID-19. This is however not enough to avoid a contraction in global GDP to approximately -3% in 2020.
Nigeria’s 2020 GDP growth outlook is equally as bleak as the IMF is estimating the average growth of -3.45%. So far, its stimulus package represents a miserly 0.34% of GDP is good but inadequate to mitigate the fallout of COVID-19 on the economy. This explains why Nigeria is seeking a total of $6.9bn support from multilateral agencies just like other African countries.
However, Nigeria is unlikely to qualify for the support without some changes to the present forex arrangement. Apart from receiving stimulus support from the multilateral, a floating exchange rate will encourage an inflow of international and diaspora investments.
In this virtual edition of the LBS Breakfast Session, Bismarck Rewane and the FDC Think Tank attempt to navigate you through the murky times and offer you a glimpse of the global, regional and domestic economy post-COVID-19.
Stay safe and hopeful.