Heterogeneity of COVID-19 Effects and Implications for Global Commodity Prices in the Medium-Term
Posted: 20 Apr 2020
Date Written: April 15, 2020
Abstract
The COVID-19 has caused a retrenchment from riskier assets as the fallout has extended into the industrial sector, which has dropped in most advanced economies in recent months. This paper argues that a recovery in oil prices is likely over the medium-term from current levels, with an extended OPEC+ Russia agreement and a tentative recovery in China placing a floor on oil price futures. As such, this paper argues a convergence of Brent crude away from current lows towards $56 per barrel. Nevertheless, CEMAC countries should ensure intra-African trade is cleared in indigenous currencies whilst governments should seek to enhance the physical and digital infrastructure to lessen perceived structural impediments and boost the long-term potential growth rate.
Keywords: COVID19, Crude Oil, Brent, Fiscal Deficit
JEL Classification: E65
Suggested Citation: Suggested Citation