TRADE DEFICIT AND THE COVID-19 PANDEMIC IN 2020: EVIDENCE FROM NIGERIA / Trade Deficit and the Covid-19 Pandemic in 2020: Evidence From Nigeria

Abstract

In this paper, the relationship between trade deficit and Corona Virus pandemic is examined using daily data spanning the period February-December, 2020. COVID-19 related variables employed are number of confirmed cases, number of discharged cases, total death cases and tested cases. To control for omitted variable bias, the paper considers inclusion of some economic variables such as exchange rate, inflation rate and interest rate. Using the S-estimation of the Robust Least Square, it is found that total death cases and test cases trigger more trade deficit. Increase in the number of discharged cases necessarily reduces trade deficit due to more active labour force. Depreciation of the naira triggers trade deficit due to short fall in supply and rising costs of importation. Hence, Nigeria should focus more on domestic production, increasing financing of small and medium scale enterprises alongside with adhering to COVID-19 protocol to further boost trade and economic growth.

Keywords

• Trade deficit
• COVID-19 pandemic
• Robust Least Squares

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