from AKANI CHAUKE in Johannesburg, South Africa
JOHANNESBURG, (CAJ News) – A sharp fall in global trade volumes, deteriorating levels of manufacturing sentiment and surging financial volatility, all as a result of the spread of the coronavirus (COVID-19), are projected to hurt Sub-Saharan economies.
Southern Africa, whose economies are largely dependent on commodity prices, will not be spared the disrupted global economic activity.
This is according to analysts as the COVID-19, which had initially spared Africa, spreads rapidly across the African continent.
In South Africa, the continent’s most advanced economy, the Economic unit of Nedbank forecast the pandemic to probably push an already fragile economy into deep recession in 2020.
“The 21-day economic lockdown is expected to hurt household and company earnings,” Nedbank stated.
The South African government of President Cyril Ramaphosa late last month announced the lockdown.
It was set to lapse on Thursday (April 16) but has been extended by two weeks as the cases increase rapidly.
There were 2 272 cases and 27 deaths at the beginning of this week.
“The response to the health crisis will add to the country’s fiscal woes,” Nedbank stated.
The projections came weeks after global rating agencies downgraded South Africa’s sovereign risk ratings in the anticipation of the acceleration in government’s debt burden.
Nedbank painted grim prospects for the rest of the Southern African region.
“eSwatini will be impacted by its close links with the South African economy,” the bank stated.
According to the bank, Tanzania will feel the brunt of the gold price decline while a slump of commodity prices, particularly copper prices will hurt Zambia.
The Namibian economy was expected to return to growth in 2020 after three consecutive years of contraction but lower prices of its key exports will inhibit a recovery, while the likely lower demand for diamonds would also impact on Botswana and Lesotho.
Nedbank forecast investment in Mozambique’s liquefied natural gas to suffer from the sharp fall of prices of mineral products.
Malawi and Zimbabwe, whose economies are agro-based, would experience a disruption in the annual tobacco marketing seasons.
Malawi’s season begins in late March to early April but has been postponed. Zimbabwe’s season is unlikely to begin as scheduled on April 20 as the date falls within a 21-day lockdown imposed by the administration of President Emmerson Mnangagwa.
In a related development, the number of households experiencing food consumption gaps is at near-record levels across much of the Southern African Development Community (SADC) region due to the impacts of last year’s severe drought, according to the Famine Early Warning System Network (FEWS NET).
While the green harvest typically starts in February/March across much of the region, this harvest was largely unavailable due to permanent wilting of crops in parts of Madagascar, Mozambique and Zimbabwe.
Despite the start of the green harvest in some areas, staple food prices continue to atypically increase in Malawi, Mozambique, and Zimbabwe.
FEWS NET noted that in Mozambique, maize grain prices were up 75 percent above last year’s prices and 55 percent above the five-year average.
In Malawi, prices are double the five-year average.
“Across the region (SADC), maize prices are expected to remain well above average despite the harvest, although will most likely follow seasonal trends,” FEWS NET concluded.
– CAJ News