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Friday, March 20, 2020 / 2:42 PM / United Capital
Research / Header Image Credit: Up News Info
COVID-19 is rattling the
healthcare, financial and economic systems around the world. Although, the
impact on Africa countries initially seemed to be limited to the external
account and financial markets, which are considered secondary due to net
foreign capital reversals. However, with an increasing number of cases in the
continent, monetary and fiscal authorities are forced to double down on their
efforts to curb the spread of the virus, as the primary impact of the outbreak
is set to add an extra layer of domestic challenge to the growing problem.
The impact has been
divergent across the region. In South Africa, largesize foreign capital
outflows across the financial market have resulted in a 9.6% depreciation in
the rand in the month of March alone (or -19.2% YTD). For the crude
oil-exporting countries in the region such as Nigeria, Angola, Libya, Gabon and
Algeria, the collapse of crude oil prices driven by weaker demand has dampened
the growth outlook for these countries.
For other raw commodity-dependent countries, the shutdown in economic
activities in the developed market is set to impair demand and the possibility
of a widespread domestic outbreak is set to affect local supply, negatively.
Also, countries dependent on tourism are on track for one of their worst years
amid global lockdowns/ shutdowns.
Accordingly, amid the negative impacts the outbreak is likely to have on economic activities across the region, monetary authorities are opting for more accommodative policy actions to bolster economic activities. Notably, monetary responses have ranged from, interest rate cut to targeted liquidity injections, while fiscal responses have been in the form of travel bans, tax break and budget estimate revisions. While we laud the effort by both monetary and fiscal authorities across the region, the big concern is the capacity of the health sector to contain a largescale outbreak if the virus becomes widespread.
Looking
Forward
Angola
Feb-2020
Inflation Rate - March 22nd
Feb-2020
Net Reserves - March 22nd
Egypt
Q4-2019
GDP Report - March 31st
Ghana
Policy
rate meeting - March 23rd Feb-2020 Gross Reserves - March 28th
Kenya
Benchmark
interest rate - March 23rd
Morocco
Feb-2020
Inflation Rate - March 20th
Feb
2020 - Money supply YoY - March 30th
Nigeria
Policy
rate meeting - March 24th
South
Africa
Feb-2020
Money Supply YoY - March 30th
Feb-2020
Trade Balance - March 31st
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