6 April 2020. As the global pandemic continues to impact the African continent, there’s growing concern over the economic impacts as well.
- African economies remain informal and very vulnerable to external shocks. In this study, three scenarios are constructed based on the description of specific key economic indicators in order to evaluate the potential impact of the pandemic on various dimensions of African economies.
- The impact on the African economy for each of the scenarios is presented, with a discussion of some of the key measures being taken by selected African Union Member States to mitigate the negative effects.
- Due to the difficulty of quantifying the real impact as a result of the uncertainty, the rapidly evolving nature of the pandemic, and scarcity of the data, the CDC’s work focuses on understanding the possible socio-economic repercussions in order to propose policy recommendations to respond to the crisis.
- The lessons learnt from the study will give more enlightenment on the way forward, as the continent is in a critical phase of the implementation of the African Continental Free Trade Area (AfCFTA).
“Cocoa has lost 21 percent of its value in the last five days,”
“Some key sectors of the African economy are already experiencing a slowdown as a result of the pandemic. Tourism, air transport, and the oil sector are visibly impacted. However, invisible impacts of Covid-19 are expected in 2020 regardless of the duration of the pandemic.”
“It’s unlikely that the 3.4 percent economic growth rate for the continent, forecast last year by the African Development Bank, will be achieved because of the COVID 19 crisis, and new models show negative values.”
“Exports and imports of African countries are projected to drop by at least 35 percent from the level reached in 2019. The loss in value is estimated at around US$270 billion, while the fight against the coronavirus itself is expected to cost an estimated $130 billion.”
“Even if African countries are relatively less affected compared to other regions for now, the spillover effects from global developments or broken supply chains may still lead to faltering economic activity”
“The high dependency of African economies vis-à-vis foreign economies predicts a negative economic spinoff for the continent, evaluated at an average loss of 1.5 points on economic growth 2020.”
The complete AU report is available at this link.