Impact of COVID-19 on Macroeconomic Performance in Africa: A Case Study of Sub-Saharan Africa
Date
2024-12-09
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Abstract
This study explored the impact of the COVID-19 pandemic on macroeconomic performance in Sub-Saharan Africa (SSA), focusing mainly on economic growth and trade openness. The study also investigated how the pandemic is moderating the effect of investment and exchange rate on economic growth and trade openness in SSA. Panel data consisting of over 38 SSA countries spanning from 2010 to 2022 was analyzed using the Generalized Method of Moments estimator to achieve the objective. The results showed that the pandemic had a significant impact on economic growth and trade openness. Specifically, the effect of the pandemic on growth was negative, while its effect on trade was positive. Furthermore, the results showed that the pandemic significantly moderated the effect of domestic investment and exchange rate on economic growth and trade. The study concludes by emphasizing the need for policies that are important for practice, research, and future economic disruptions.
Description
What motivated my study was the devastating impact the pandemic had on countries of the world and sub-Saharan Africa. So while it is evident that we know the effect the pandemic had on the globe at large, but then, it is important we quantify the effect because it is so important for a policy that we have a clear-cut direction as we don't just work with hearsay or graphs here and there or very important trends. rather, we must try to quantify the true effect of things which will be important for both policy, practice and research. Another thing is that while it is evident that the pandemic has influenced the economies of nations negatively, empirical works of literature on the effect of the pandemic particularly, causal literature, i.e. literature that tries to give associations, causality are quite scarce within the frameworks of sub-Saharan Africa region motivated me to carry out this research. Most importantly, this research will be important for policy, i.e. plans concerning global and economic shocks because the world is like a cycle, the world is going through shocks at every point in time and the 21st century, we have had two (2) major global shocks which are 2007, 2008, 2009 global financial crisis, and recently, the COVID-19 pandemic (Health) and we have seen a trend over time that the world tend to go through a lot of shocks, economic, volatility, tensions through wars, disease and disease outbreaks, so this study is going to be important that where in the event of economic shocks like this, how should we view it, what should we look at, what is the true impact of this shock and what should we be looking out for. Also, what are the likely channels of transmission? It is not enough to say that the pandemic impacts growth, how does it impact growth, so we look for transmissions and for this study, while we know that their lots of transmissions to growth, we look at domestic investments and the exchange rate because, we are trying to look at the macro side of it that is domestic and an international benchmark which is the exchange rate. After all, economies are open. So while we look at a domestic variable that impacts growth, we also look at a foreign variable that impacts growth and that is why we focus on transmission mechanisms or domestic investment and exchange rate.
Keywords
COVID-19, Macroeconomic, Perfomance, Sub-Saharan Africa