A second wave of the coronavirus (COVID-19) pandemic is forcing some European and Asian countries to implement lockdowns that could hurt the global market and many sub-Saharan African economies. In places like California, Germany and South Korea a renewed lockdown which could last till early January is being put in place, a recent report shows.
The United States (U.S), particularly, California is the world’s biggest oil consumer, followed by China, Japan and India. According to the report, U.S. gasoline consumption fell during the Thanksgiving holiday week to the lowest in more than 20 years. This has been attributed to reduced travel during the pandemic.
Also, oil prices fell around 1 percent on Monday as surging coronavirus cases and heightened tensions between the United States and China undermined the positive impact from an OPEC+ deal on production. Experts believe this could have a huge impact on the spending power of oil-dependent sub-Saharan African countries like Nigeria & Angola as a hike in the price of the dollars is expected.
During the second quarter of 2020, most African countries were forced to request financial aid from international lenders to pad up their national budget. This was largely due to COVID-19 induced lockdowns and a price war between the Organization of Petroleum Exporting Countries (OPEC) and its allies OPEC+. Thus, leading to a sharp decline in the cost of oil.
When the global oil price slumped in Q1, the price of the dollar sharply rose, too. As strict lockdowns were imposed around the world because of the pandemic, Africa lost billions in export revenues. With the projected contraction of growth, Africa could suffer GDP losses of between $145.5 billion (baseline) and $189.7 billion (worst case) in 2020.