An initial analysis by McKinsey, a US management consulting firm, predicts that the African economy will lose between $90 billion and $200 billion over the next nine months alone.
The research oversees four scenarios that show that African GDP could shrink by between 3 to 8 percent in 2020 that translates into a loss of between $90 billion and $200 billion for African economies.
Although according to the projects that things are going to get worse particularly if containment measures do not prove effective, in the absence of major fiscal stimulus, this pandemic is likely to tip Africa into further economic contraction in 2020.
To gauge the possible extent of this impact, McKinsey modeled four scenarios for how differing rates of COVID-19 transmission – both globally and within Africa – would affect Africa’s economic growth.
Even in the most optimistic scenario, McKinsey project that Africa’s GDP growth would be cut to just 0.4 percent in 2020 – and this scenario is looking less and less likely by the day. In all other scenarios, McKinsey project that Africa will experience an economic contraction in 2020, with its GDP growth rate falling by between five and eight percentage points. The first scenario is set as ‘contained global and Africa outbreak.’ In this least-worst case, Africa’s average GDP growth in 2020 would be cut from 3.9 percent (the forecast prior to the crisis) to 0.4 percent. This scenario assumes that Asia experiences a continued recovery from the pandemic, and a gradual economic restart. In Africa, McKinsey assumes that most countries experience isolated cases or small cluster outbreaks – but with carefully managed restrictions and a strong response, there is no widespread outbreak. And the worst case scenario is ‘Resurgent global outbreak, Africa widespread.’ In this case, Africa’s average GDP growth in 2020 would be cut by about eight percentage points, resulting in a negative growth rate of -3.9 percent. Globally, McKinsey assumes that Europe and the United States continue to face significant outbreaks as China and East Asian countries face a surge of re-infection. In addition, significant outbreaks occur in most major African economies, leading to a serious economic downturn.
The report recommended that governments, the private sector and development institutions need to double down on their already proven resolve and significantly expand existing efforts to safeguard economies and livelihoods across Africa.
The report further suggests as a framework for near term action by governments, the private sector, and development institutions to mitigate this impact. These actions are drawn from a global scan of economic interventions already being implemented or considered, and recent discussions with public- and private-sector leaders across Africa.
However the report suggests that in many countries, there is an opportunity to take bolder, more creative steps to secure supply chains of essential products, contain the health crisis, maintain the stability of financial systems, help businesses survive, and support households’ economic welfare.
So decision makers should intended with data and tools to inform and strengthen their response in order to make the most of the limited time and resources available.
According to the Africa development bank outlook before the outbreak and spread of the pandemic the real GDP growth, estimates at 3.4 percent for 2019, is projected to accelerate to 3.9 percent in 2020 and to 4.1 percent in 2021.
However, to make Africa’s growth more inclusive, countries need to deepen structural reforms to diversify their productive base, build resilience to extreme weather events by adopting climate-smart agricultural techniques and providing risk-sharing platforms for households, create more fiscal space to expand social safety nets and increase the efficiency of existing programs, and remove obstacles to the movement of workers to more productive opportunities within and across countries.
In a related development, the economic impacts of the COVID-19 pandemic in Ethiopia – in regards to the airline industry and allied businesses – could cost the country some USD 1.2 billion in GDP and affect more than 323,000 jobs, a global airline body disclosed.
In a statement issued on Thursday, the International Air Transport Association (IATA) highlighted the impacts of the COVID-19 pandemic on Africa and Middle East. IATA strengthened its call for urgent action from governments in Africa and the Middle East to provide financial relief to airlines as the association’s latest scenario for potential revenue loss by carriers in Africa and the Middle East reached USD 23 billion (19 billion in the Middle East and four billion in Africa). This translates into a drop of industry revenues of 32 percent for Africa and 39 percent for the Middle East for 2020 as compared to 2019.
IATA revealed that Ethiopia will have 1.6 million fewer passengers resulting in a USD 0.3 billion revenue loss, risking 327,062 jobs and USD 1.2 billion in contribution to Ethiopia’s economy. In 2017 the country’s passenger journey was 7.3 million.
African economy will lose up to $200 billion in the next nine months
ECA contributes awareness materials to aid Ethiopia’s fight againstCOVID-19
The Economic Commission for Africa and the UN Communications Group last week handed over to the Government of Ethiopia, awareness materials to ensure ordinary citizens have access to timely and accurate information in the fight against the COVID-19 outbreak.
Over 40000 flyers and brochures were printed for distribution by relevant government entities.
Topics include emergency preparedness and response, the disease and its conditions, healthy living and safety, among others.
“We are honoured to partner with the Ethiopian Public Health Institute and the Ministry of Transport during this time of crisis,” said Ali Todaro, Chief of Conference Management Section at the ECA.
“The UN is working around the world to tackle the COVID-19 outbreak. We recognize that a positive outcome is only possible if the ordinary person is fully informed.”
Charles Ndungu, Chief of ECA’s Printing and Publishing Unit, added his voice, saying, “Every time one places a call in Ethiopia, they get an educational message about coronavirus prevention. But we all know that is not enough because not everyone has a cell phone. The ECA is happy to be playing its small part in this massive fight against the deadly virus that is set change our world as we know it, if we do not act fast.”
UNESCO mobilizes 122 countries to promote open science and reinforced cooperation in the face of COVID-19
UNESCO on 30 March hosted an online meeting of representatives of ministries in charge of science all over the world. Participants included 77 ministers, including governmental secretaries representing a total of 122 countries, as well as Mariya Gabriel, European Commissioner for Innovation, Research, Culture, Education and Youth, Sarah Anyang Agbor, African Union Commissioner for Human Resources, Science and Technology, Moisés Omar Halleslevens Acevedo, former Vice President of Nicaragua and Dr Soumya Swaminathan, the World Health Organization’s Chief Scientist.
The objective of the meeting was to exchange views on the role of international cooperation in science and increased investment in the context of COVID-19.
The key issue of open science, for which UNESCO has been working on an International Recommendation since November 2019, was a major topic of discussion.
UNESCO Director-General Audrey Azoulay called on governments to reinforce scientific cooperation and integrate open science in their research programmes to prevent and mitigate global crises.
“The COVID-19 pandemic raises our awareness of the importance of science, both in research and international cooperation. The present crisis also demonstrates the urgency of stepping up information sharing through open science. The time has come for us to commit all together,” the Director-General declared.
COVID-19 likely to shrink global GDP by almost one per cent in 2020
The global economy could shrink by almost one percent this year—0.9 percent—due to the COVID-19 pandemic, and world output could contract further if imposed restrictions on economic activities extend to the third quarter of the year and if fiscal responses fail to support income and consumer spending, according to a new briefing issued by the United Nations Department of Economic and Social Affairs.
Growing restrictions on the movement of people and lockdowns in Europe and North America are hitting the service sector hard, particularly industries that involve physical interactions such as retail trade, leisure and hospitality, recreation and transportation services. Collectively, they account for more than a quarter of all jobs in these economies. As businesses lose revenue, unemployment is likely to increase sharply, transforming a supply-side shock to a wider demand-side shock for the economy.
The severity of the economic impact—whether a moderate or deep recession—will largely depend on the duration of restrictions on the movement of people and economic activities in major economies and on the actual size and efficacy of fiscal responses to the crisis. According to the report, a well-designed fiscal stimulus package, prioritizing health spending to contain the spread of the virus and providing income support to households most affected by the pandemic would help to minimize the likelihood of a deep economic recession.
“Urgent and bold policy measures are needed, not only to contain the pandemic and save lives, but also to protect the most vulnerable in our societies from economic ruin and to sustain economic growth and financial stability,” stressed Liu Zhenmin, Under-Secretary-General for Economic and Social Affairs.
