African economies should brace up for impact of COVID 19- Economist
The COVID – 19 has caused huge crisis for the worlds economy and financial markets. With more than 137,000 cases confirmed in countries all over the world, the world health organization has declared the virus to be a global pandemic which indicates the fact that it will have a sustained global impact on lives of people around the world.
In Africa some economies were already slowing before this pandemic; which may actually pose a serious risk of sending many of them into economic recessions. As the virus is medically contagious it is economically contagious as well.
The fear now gripping financial markets reflects a recognition of a growing economic impact. The coronavirus, which had already disrupted factories and trade in China and across East Asia, is now wreaking havoc in Europe. Japan’s economy shrank last quarter even more than initially thought, and Tokyo is toying with another huge fiscal stimulus to goose the economy back to life.
Germany, too, is mulling a multibillion-euro economic injection to offset the worst of the crisis, while France is staring at now-stagnant growth. Italy has essentially shut down the industrial northern part of the country as cases and fatalities continue to mount, all but guaranteeing another recession.
This pandemic is a world shattering event whose consequences we can only begin to imagine today. And I can confidently confirm that this may lead to disrupted markets and expose the competence of governments around the world. As a research economist,I have discovered that COVID-19 will create a world that is less prosperous and less free. The world did not see this coming and it’s sad it has to happen in this manner, but the combination of the deadly virus ,inadequate planning has kept the world on a new worrisome path.
It is very obvious that some African countries started on a positive note in the year 2020 with regards to its economy yet the unexpected has given it a whole new turn.
Economic activity within this period in many advanced and emerging market countries, remittances to Africa could experience significant declines.
Africa should be aware of some major effects in their economy after this global pandemic as trade, tourism, remittances, financial markets, and consumer and business sentiment are all disrupted
I estimate that the COVID-19 related in the next few months will lower sub-Saharan Africa’s GDP growth in 2020 to between 1.5 percent and 2.5 percent.
In a case where African governments should quickly take the appropriate steps to contain the spread of the virus and the global conditions stabilize, the regional GDP growth will decline by about 1 percent point, to 2.5 percent. But in a case where the responses are not swift and the pandemic lasts longer, and global conditions take more time to normalize, the disruption will be more severe, resulting in a 2.1 percent point reduction in growth, to 1.5 percent.
I urge global community to come together to collaborate, coordinate, share lessons learned, and assist each other to combat the pandemic entirely. Until every country is safe, the world is not safe. The outbreak should serve to highlight the extent to which countries are proactive,interconnected and interdependent and should be a call to strengthen global institutions and global governance.
By: Michael Osei Akomea
Research Economist(Center for Africa poverty Eradication)
Operational Consultant( worldbank group)