COVID-19 was declared a pandemic on March 11, 2020 by World Health Organization causing huge impact on people’s lives, families and communities.
The rapid outbreak of the COVID-19 created an alarming health crisis that held the world to its knees. The impact of COVID-19 can be felt by all aspect of life: economic, business and commercial aspect were impacted globally. The virus knows no borders, the impacts will continue to spread.
Notably, almost every part of the world has been held to standstill and businesses in Nigeria have been adversely impacted and this is telling on everyone as COVID-19 disruptions can be felt especially through hunger as people are restricted not to go out.
As the international response continues to develop, we know that organizations are facing significant challenges and need to respond rapidly. Digiconceptng may not be able to offer much to help but we provide educative and informative post that can help our online users with answers to certain areas of their search and i trust some can attest to this impact we offer.
Understanding the impact of the COVID-19 outbreak on the Nigerian economy
It was gathered that before the COVID-19 pandemic, the Nigerian government had been striving to recover from the 2014 oil price shock, with GDP growth tapering around 2.3 percent in 2019. In February, the IMF revised the 2020 GDP growth rate from 2.5 percent to 2 percent, as a result of relatively low oil prices and limited fiscal space.
Also, Nigeria’s debt profile has been a source of concern for policymakers and development practitioners as the most recent estimate puts the debt service-to-revenue ratio at 60 percent, which is likely to worsen amid the steep decline in revenue associated with falling oil prices. These constraining factors will aggravate the economic impact of the COVID-19 outbreak and make it more difficult for the government manage the crisis.
Aggregate demand will fall, but government expenditure will rise
In Nigeria, efforts were already being made to bolster aggregate demand through increased government spending and tax cuts for businesses. The public budget increased from 8.83 trillion naira ($24.53 billion) in 2019 to 10.59 trillion naira ($29.42 billion) in 2020, representing 11 percent of the national GDP, while small businesses have been exempted from company income tax, and the tax rate for medium-sized businesses has been revised downwards from 30 to 20 percent. Unfortunately, the COVID-19 crisis is causing all components of aggregate demand, except for government purchases, to fall (Figure 1).
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We believe that the COVID-19 threat will eventually fade away just like the Ebola case then. However, social-economic impact will still be felt long after virus fades.