The Infected Economy: Interrogating the Early Economic Impacts of COVID-19 Pandemic in Nigeria

Abstract

COVID-19 pandemic infests every sphere of life, including the economy, thereby accounting for tremendous economic calamities on a global scale. Some of such calamities are still evolving. This paper examines the economic impact of COVID-19 with particular emphasis on Nigeria within the early days of the pandemic. The article established its theoretical foundation through a marriage of both AK-type of endogenous growth theory and endogenous growth model with an assumption of increasing returns to scale. Using a simple descriptive technique, the article identified the devastating economic impacts of the pandemic on the oil-dependent economy in the short run. The paper identifies four fundamental COVID-19 economic shocks; the declined price of oil; unplanned increase in health spending, temporary shutdown of the local economy; and unanticipated palliative needs. Some of these impacts also include loss in income and output, increasing rate of unemployment, and poverty contributing to the disruption of the previously steady growth rate. In the longer term, COVID-19-related damages will have no or insignificant negative impact on growth. The economy is bound to bounce back on a steady growth path provided the quality of institutions is strengthened to the extent of surmounting the disruptive shocks.