Africa Could Take A Big Economic Hit From Coronavirus
With strong economic ties to China, African countries could take a huge economic hit from the coronavirus.
A slowdown in China and a 5 percent drop in oil prices over one year could mean $4 billion in lost export revenue for sub-Saharan Africa, Bloomberg reports.
That is equivalent to 0.3 percent of sub-Saharan Africa’s gross domestic product, according to a study by the Overseas Development Institute.
There have been 14 confirmed cases thus far in Egypt (2), Algeria (8), Morocco (1), Tunisia (1), Senegal (1) and Nigeria (1) but nothing resembling the rapid spread of the virus in countries including China, Iran, South Korea, and Italy.
Africa’s low coronavirus rate has puzzled health experts, some of whom hypothesize that faulty detection, climatic factors or good fortune could be the reason behind Africa’s remarkably small number of confirmed cases, according to France24.
While the reported health impact in Africa has been minimal, sub-Saharan Africa may be the region hit hardest economically outside of Asia by the spread of the coronavirus, Bloomberg reports.
The outbreak has shut down much of the Chinese economy, threatening world economic growth and negatively affecting appetite for oil and metals that are the lifeline of many African countries.
Africa’s top oil exporter, Nigeria, had its economic growth projection slashed by 0.5 percent-to-2 percent because of the decline in oil prices, according to the International Monetary Fund.
Other resource-dependent African countries are also expected to be hit hard due to weak demand from China.
Angola, the Democratic Republic of Congo and Zambia are three examples of countries that are dependent on copper and iron ore exports. Copper and iron ore prices have declined 8 percent and 1.5 percent respectively this year, Moneyweb reports.
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A slump in Chinese consumer spending is also expected to dent smaller, niche export markets, according to Bloomberg.
From an African perspective, that means probable negative effects for products such as Namibian beef, Rwandan coffee, Kenyan avocados, and South African fruit.