Thursday, October 29, 2020

Corona virus could become a global economic epidemic

While the 2003 outbreak of Severe acute respiratory syndrome (Sars), another China born coronavirus did little damage to the global economy, its “cousin”, Covid-19 could tip the world economy into recession, so says economic pundits. 

This week it became clear that the emergence of hundreds of coronavirus cases in two major economies outside China dashed hopes of a speedy recovery from an epidemic that has already wreaked havoc on global supply chains and hit global companies profits.

As a result, economic pundits have since cautioned that the fears that the latest coronavirus – Covid-19, which started in January 2020 could tip the world economy into recession are not far-fetched.

In Botswana, the country’s central bank governor – Moses Pelaelo says it is becoming increasingly clear that the new coronavirus could do much more damage than its predecessor – Sars to the local economy. 

Pelaelo told journalists in the capital Gaborone last week that China – where the virus broke is one of the biggest markets for Botswana’s diamonds. He said the the impact, which he said would be negative, will depend on the slowdown in the east Asian country. 

Apart from diamonds, Pelaelo said that the coronavirus outbreak has also has automatically affected the travelling of tourists from all over the world including Asia and China into Botswana. 

Pelaelo’s sentiments follows cautions also from the International Monetary Fund which confirmed that the coronavirus outbreak has disrupted economic activity in China and could put the global economy recovery at risk. 

IMF Managing Director – Kristalina Georgieva said last week that global traders must brace for turbulent times amid signs the virus is spreading rapidly outside China. 

In January, IMF projected global growth to strengthen from 2.9 percent last year to 3.3 percent this year. Since then, COVID-19—a global health emergency—has disrupted activity in China.

“In this scenario, 2020 growth for China would be 5.6 percent. This is 0.4 percentage points lower than the January WEO Update. Global growth would be about 0.1 percentage points lower. But we are also looking at more dire scenarios where the spread of the virus continues for longer and more globally, and the growth consequences are more protracted”, said Georgieva. 

Meanwhile, the IMF last weekend gave its full assurance on its readiness to provide grants for debt relief to the poorest, most vulnerable countries through a special trust designed for public health and natural disasters. 

Chinese president Xi Jinping vowed to step up Beijing’s efforts to dampen the hit to growth after admitting the virus will have a “relatively big impact on the economy.”

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