The Coronavirus Outbreak Hits African Economies
Capital Economics says the coronavirus outbreak is indirectly hitting Africa’s economy, with a sharp fall in commodity prices. China’s mass shutdowns have caused an international ripple effect in areas such as manufacturing and tourism.
Factory closures, supply chain disruption, and a ban on outbound tour groups have also roiled the tourism and manufacturing sectors.
According to John Ashbourne, port closures in China are forcing oil importers to cancel purchases and sellers to look elsewhere.
John Ashbourne is the senior emerging markets economist at Capital Economics.
In Angola, Sonangol – a state-owned petroleum and natural gas company has had to re-sell at least one shipment at a discount. According to Ashbourne, the shipment was already en route.
“While the price effect will hit all of Africa’s commodity exporters, these trade disturbances will mostly affect West African oil exporters,” Ashbourne said.
Brent crude prices have been declining steeply since the outbreak hit the headlines. Prices went down 16.96% since the turn of the year and traded just over $54 per barrel on Monday afternoon.
For other base metals, African export markets rely heavily on are iron ore and copper. They have also depreciated sharply in recent weeks.
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Economic Exposure
Industrial commodity exports from Congo amount to almost 70% of GDP, with exports to China being more than 50% of the total GDP.
More than 20% of Angola’s GDP also relies heavily on Chinese industrial exports.
Zambia, Nigeria, and Ghana are also countries with significant exposure.
Although there has been no positive diagnosis on the African continent, experts have warned the subcontinent is susceptible, considering its strong ties to China.
Last week, the World Health Organization (WHO) declared the virus a global health emergency. WHO’s Chief Tedros Adhanom said their greatest concern was the potential for it to reach countries with weaker health systems.
