Tapiwanashe W Mangwiro
HARARE (News of the South) – In their recent Webinar, on Covid-19 impact on Sub Saharan Africa, Fitch noted that growth was going to be affected although it will remain positive at 0.3% from 2.5% recorded in 2019. The growth will be rallied by infrastructure development in East Africa, that is Ethiopia, Kenya and Tanzania.
However a downturn in tourism does pose a substantial downside risk for these economies especially Ethiopia and Tanzania.
“Southern Africa will continue to drag on regional growth, with recession continuing in Angola and Zimbabwe, and growth falling into negative territory in South Africa,” Fitch noted.
Angola
GDP is projected to come in at -1.5% in 2020 due to low oil prices and rising inflation. This will be the country’s fifth year consecutive in recession. With existing oil fields maturing and a lack of new major projects coming online, domestic oil production and exports which account for over 90.0% of total goods exports are expected to fall even further in 2020.
With oil also accounting for around 70.0% of fiscal revenues, falling oil output will significantly limit the government’s capacity to implement bold stimulus measures to reduce the impact of Covid-19 and other constraints.
Moreover, reduced dollar inflows amid lower export receipts will weigh on the country’s stock of foreign reserves, likely pressuring the National Bank of Angola to further weaken the kwanza. This will increase imported price pressures and stifle private consumption and investment.
South Africa
A continued less aggressive action by the South African Reserve Bank (SARB) will provide some support for consumer spending, while government expenditure will be boosted by efforts to address the impact of the Covid-19 pandemic.
However, South Africa remains highly exposed to growth slowdowns in China or the EU, as well as the decline in international tourist numbers in the coming quarters and downward pressure on commodity prices.
Fitch noted that imposition of a national state of disaster will affect the retail and mining industries, among others, and should measures to limit social contact prove protracted, the recession is likely to be deeper than currently projected.
Therefore overall growth is seen to slow to -1.9% in 2020, from 0.2% in 2019.
Zimbabwe
With consecutive droughts, the country has its own problems despite the Covid-19 pandemic, which leaves it with nothing much it can do to help lower the effects of the pandemic. The Reserve Bank of Zimbabwe (RBZ) has issued some interventions in order to help companies in dealing with the pandemic.
The country relies on metals for foreign currency and tobacco exports which account for 40% of total exports. With industrial metals prices falling by an average of 30% in the last month the country faces low foreign currency income and thus more pressure on the little foreign currency they have.
With Tourism on the low, the country sees further loss of income. Imported inflation will continue to pressure consumers as Fitch sees the country ending with overall growth of -2.5% in 2020.
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