The Impact of Covid-19 Shock on International Trade and Economic Growth in Nigeria

Abstract

As Corona Virus Disease of 2019 (COVID-19) emerged from China and spread around the world like a pandemic, COVID-19 has disrupted global economies, with restrictions in movement (both domestic and international) leading to large unemployment, supply chains and gross domestic product (GDP) changes across the world. Nigeria been a densely populated country with inadequate medical facilities was left with only one option which was to follow the policy of lockdown. Restrictions on both people and product flow have disrupted supply chains and accelerated the unemployment crisis, thereby impacting on GDP and trade. Thus, discussing the transmission channels through which the shock (covid-19 pandemic) adversely affect the Nigerian economy is considered beneficial. This paper, therefore, examines the impact of covid-19 shock on international trade and economic growth in Nigeria. This study also investigates the causal relationship between international trade and economic growth in Nigeria. The method employed to achieve the stated objectives is the Recursive Structural Vector Autoregression (SVAR) technique and Granger Causality, using the quarterly time series data sourced from the World Bank Development Indicator 2020 and Federal Reserve Economic Data (FRED), for periods between 1985 to 2020.The major findings from the study show that there is a significant negative impact of COVID-19 shock on economic growth and has also impacted negatively on import and export level in Nigeria. It also shows that the impact of COVID-19 was more significant on import than it was on export in Nigeria. Also, the result of from the study revealed that there exists a bidirectional relationship between trade as the sum of exports and imports as a share of GDP and economic growth in Nigeria. With these findings, the study recommends that policymakers take drastic measures to curtail the pandemic and forestall a recession that may be consequent upon the pandemic in Nigeria.