by Xinhua Writer Ding Lei
NAIROBI, March 31 (Xinhua) -- Central banks in sub-Saharan Africa have sharply revised downward their countries' growth forecasts for 2020 as impact of the rapidly evolving coronavirus pandemic on the regional economy could be more severe than expected.
Ghana, one of the world's top ten fastest growing economies, warned during a hurriedly rescheduled policymaker meeting that the adverse effects of COVID-19 on growth, along with the sharp fall in commodity prices, will weigh heavily on economic activities.
Bank of Ghana, the central bank, forecast the country's economic growth to slow to five percent this year, or even decelerate to 2.5 percent in a worst-case scenario, due to the negative impact of COVID-19 on crude oil export earnings and domestic production.
South Africa, the most industrialized economy on the continent, also downgraded its growth forecast after reviewing the COVID-19 fallout.
At a regular gathering earlier this month, the South African Reserve Bank predicted the country's economy, which was already on a technical recession following an energy crisis last year, is expected to contract by 0.2 percent in 2020.
Lesetja Kganyago, Governor of the South African Reserve Bank, said during a webcast press conference on March 19 that South Africa's economic outlook was quite fragile, adding that the COVID-19 may result in weaker demand for exports and domestic goods and services, but lower oil prices could partly offset such an adverse impact.
Jannie Rossouw, head of the School of Economic and Business Sciences at the University of the Witwatersrand, offered a gloomier outlook, predicting the country's growth to contract by 0.5 percent to one percent for 2020.
The Central Bank of Nigeria, in a statement released on March 24, said that the continued spread of COVID-19 and the current downturn in oil prices are headwinds for the Nigerian economy and growth is expected to be subdued in 2020.
However, the bank believed that the risks could be mitigated if timely and effective response from monetary and fiscal authorities is put in place and the government pushes for diversifying the economy.
East African countries have offered bleak forecast as well. The Kenyan central bank said the coronavirus outbreak would have a severe impact on the economy and this year's growth is expected to decline significantly to 3.4 percent from a previous estimate of 6.2 percent, as demand by Kenya's main trading partners decreases, causing disruptions to supply chains and domestic production.
Gerrishon Ikiara, senior economics lecturer at the University of Nairobi, told Xinhua that Kenya's GDP growth rate could slump to about two percent at the end of 2020 depending on how long the coronavirus takes to be brought under control at the global, regional and individual country levels.
"Kenya's tourist industry has been heavily battered with huge negative impact on foreign exchange earnings and employment. Many of the ongoing major infrastructural projects may have to be scaled downwards as budgetary contractions takes place, further worsening the socio-economic conditions of the people," said Ikiara.
The IMF said in a blog on March 25 that "the pandemic will have a substantial economic impact on sub-Saharan Africa", adding that its growth forecast in April's regional outlook will be significantly lower.
"The slowdown will mean revenues take a hit, just as countries face additional public spending needs", said IMF.
The low growth forecast has led to promises of action from Africa's central banks and multinational institutions seeking to limit the economic damage. Central banks of Ghana, South Africa and Kenya, among others, have deployed the conventional interest rate cut tool to help mitigate the economic fallout.
But there were exceptions to this trend of monetary easing. Nigeria and Angola, two of the largest crude producers on the continent, both held their main interest rate unchanged.
Godwin Emefiele, Governor of Central Bank of Nigeria, said at a webcast press briefing on March 24 that loosening monetary policy would stimulate the economy in the short term but it would also exacerbate an already worsening inflationary condition and increase pressure on foreign reserves and exchange rate. "There was a need to be cautious in monetary easing", the governor added.
According to data released by the Africa Center for Disease Control and Prevention, the death toll from the COVID-19 pandemic on the African continent has reached 146 as confirmed positives cases surpassed 4,760 as of Monday. Ahmed Ogwell, deputy director of Africa CDC, also said that 46 African countries have reported confirmed cases.
To help alleviate the economic and social impact of COVID-19 on Africa's economies, the African Development Bank is moving to provide flexible responses. The intuition announced on March 27 that it has raised three billion U.S. dollars in a three-year social bond, the largest social bond ever launched in international capital markets to date.
