The COMESA region economy is expected to grow at 0.6 per cent this year from 5.2 per cent in 2019 and 6.0 in 2018 according to a report by COMESA Monetary Institute (CMI)
The slight decrease in 2019 was caused by low commodity prices while the expected slump this year will be caused by the devastating impact of the pandemic resulting in a deeper economic contraction for the COMESA region.
According to the report, the expected contraction of the regional economy will be driven by the decline in global demand and regional spillovers, the impact of containment measures, the impact of multiple shocks and the external financial constraint.
Economic activities have been disrupted by COVID-19 mitigation measures including quarantines, lockdowns, travel restrictions, border closures among other measures which have also led to mass unemployment and loss of livelihoods, especially in the informal sector the report said.
“Decline in global demand and travel has resulted in rapid fall in trade and tourism while disruption of regional trade due to border closures has severely affected cross-border trade in the region,” the report states.
“Severe contraction is also expected in countries where tourism significantly contributes to economic growth such as Mauritius, Seychelles, Egypt and Kenya, among others.”
According to the COMESA Monetary Institute report, the economic contraction in the region will be significantly contributed by the impact of multiple shocks most importantly the effect of locust invasion, floods and the collapse of commodity prices.
The immediate concern for the region now is opening the economies as well as to contain the spread of the pandemic.
“How to strike a balance between the two almost conflicting objectives will determine the speed and extent of economic recovery and return to normalcy,” the report adds.
“Key towards getting the balance right will depend on how effective and efficient governments in the region will be as they continue to carry out public health measures and the extent to which the public will adapt the same.”
The report recommends that going forward, the key priority should be strengthening of continental value chains given the uncertain global business environment.
Source: The Exchange