Coronavirus and the World Economy
The coronavirus has arrived in the most remote place of the World and 210 countries and territories are affected. Namibia has now 16 cases and South Africa 2 506. China reported that their economy starts to normalize but a decline in export orders is a major problem. Namibia is in its 20th day of a total lockdown and this was extended to the 4th of May. The latest cases and deaths are the following:
Table 1: Coronavirus cases – 27 January – 16 April
|Region/Country||Cases27 Jan||Cases27 Feb||Cases26 Mar||Cases2 Apr||Cases9 Apr||Cases16 Apr|
|China||4 581||78 499||81 285||81 589||81 865||82 341|
|Europe||–||556||246 327||490 714||729 443||932 464|
|Africa||1 005||4 687||11 344||16 825|
|North America||74||89 478||256 160||454 598||672 727|
|Rest of the World||–||2 495||53 322||117 280||242 192||380 387|
|Total||4 581||82 183||471 417||950 430||1 519 442||2 084 744|
From the middle of March the epicentre of the coronavirus has shifted from China to Europe and then to the US. Currently 45% of all reported cases are in Europe and 66% of the total deaths. The US reported 644 348 cases and 28 554 deaths. Only 0.8% of the reported cases are on the African continent; however one should keep in mind that testing is also not a virtue.
Table 2: Coronavirus deaths – 27 January – 16 April
|Region/Country||Deaths27 Jan||Deaths27 Feb||Deaths26 Mar||Deaths2 Apr||Deaths9 Apr||Deaths16 Apr|
|China||106||2 747||3 287||3 318||3 335||3 342|
|Europe||–||14||14 143||34 406||61 061||88 171|
|North America||–||1 334||6 249||15 232||29 564|
|Rest of the World||–||43||2 503||4 126||7 810||12 699|
|Total||106||2 804||21 295||48 276||88 536||134685|
 North America is Canada and the US
If the current trend continues the total number of deaths will be around 170 000 in a weeks’ time. The USA, Spain, Italy, France and the UK have today 73.5% of the number of deaths reported in the whole World.
Africa was out of limelight in the beginning and Egypt reported the first cases. Slowly the coronavirus pandemic is reaching the African continent and all countries reported 16 825 cases and 909 deaths. How is the virus spreading in the SADC region? There are only 3 472 cases reported in the SADC region and 78 deaths.
Table 3: Coronavirus cases and deaths in the SADC region – 2 – 16 April 2020
|SADC country||Cases2 Apr||Cases9 Apr||Cases16 Apr||Deaths2 Apr||Deaths9 Apr||Deaths16 Apr|
|South Africa||1 353||1 845||2 506||5||18||34|
|Total||1 791||2 555||3 472||23||52||78|
Each country of the World announced policies and regulations to fight the spread of the coronavirus. Spain restarted its economy on Monday by allowing the manufacturing and construction sector to operate again. Austria and Denmark lifted certain restrictions on Tuesday and many other countries are partially lifting the lockdown and enabling certain sectors to conduct business. Namibia extended the lockdown to 4 May and many businesses are of the view this is not relevant to our local circumstances with only 16 reported cases and no deaths yet. Namibia had also a prolonged recession prior to the coronavirus pandemic and the majority of the businesses had a very weak balance sheet. Is the extension of the lockdown to the 4th of May an ‘overkill’? To answer this question let’s compare Africa with Europe on COVID 19 relevant criteria:
Table 4: Comparing Africa with Europe
|Population in million||1341||748|
|Coronavirus cases per capita||0.00013||0.1|
|Coronavirus deaths per capita||0.00007||0.0011|
|Tests conducted per 1 million||395||12 274|
|Urbanisation in %||43.4||74.3|
|Age structure 0-54 years||96.0%||67.2%|
|Age structure 55 years plus||4.0%||32.8%|
The big difference between Africa and Europe is that Africa is less urbanized (43.4%), only 4% of the population is older than 55 years (high risk) and on average Africa did only 395 tests per 1 million of the population in comparison to the average 12 274 tests of Europe. The average temperatures were also much higher in February compared to the average temperature in Europe. The concern should be the low testing rate in Africa and especially in Namibia to assess the real risks.
Is there light at the end of the tunnel? Yes, the World reached a turning point and most countries prepare themselves to get the economies going again. There is no indication yet that a third wave is coming in the rest of the World.
Graph 1: Weekly change of the World’s coronavirus cases and deaths
Source: Compiled from Worldometers data
The graph above depicts the weekly change since beginning of February 2020 in the whole World of reported cases and deaths. There is hope, since 2 April a decline in the growth of cases and deaths occurred.
The real economic costs are spiralling and a World recession has become a reality, much worse than in 2009. Such dramatic economic implication of a lockdown of major economies has never been experienced before and the economic growth projections vary and are updated daily. The World economy will move into a severe recession as the MSCI World Index (below) is signalling. The MSCI World Index consists of the stock exchange performance of 28 countries.
Graph 2: MSCI World Index
Source: MSCI Index
The MSCI index was at 2401 on 22 February 2020 and closed yesterday at 1960, a fall of 18.4%. Substantial stimulus packages in the US, Japan and Germany had a positive influence on stock markets since 20 March. How long the short rally will last depends on market sentiment and the reporting of listed companies in the near future.
Table 5: Selected international commodity prices
|Winners for Namibia|
|Energy: Brent oil||-0.09%||-60.02%|
Source: Trading economics. 16 April 2020
The N$ is currently trading 18.7 to the US Dollar and 20.3 to the Euro.
The lockdown should have been only extended for a week and not until the 4th of May. The economic risks are mounting and we have to get our exports going. People are suffering in the informal sector and these risks are now much more severe than the health risks. Government should reconsider its policy to allow at least that the manufacturing, construction, mining and fishing sector can commence business by 22 April.
Compiled by: Rainer Ritter
16 April 2020