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 – 23 April
|Region/Country||Cases27 Jan||Cases27 Feb||Cases26 Mar||Cases2 Apr||Cases9 Apr||Cases16 Apr||Cases23 Apr|
|China||4 581||78 499||81 285||81 589||81 865||82 341||82 798|
|Europe||–||556||246 327||490 714||729 443||932 464||1 090 873|
|Africa||1 005||4 687||11 344||16 825||24 894|
|North America||74||89 478||256 160||454 598||672 727||889 282|
|Rest of the World||–||2 495||53 322||117 280||242 192||380 387||551 178|
|Total||4 581||82 183||471 417||950 430||1 519 442||2 084 744||2 639 025|
From the middle of March the epicentre of the coronavirus has shifted from China to Europe and then to the US. Currently 41% of all reported cases are in Europe and 60% of the total deaths. The US reported 849 092 cases and 47 681 deaths. Only 0.9% 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 – 23 April
|Region/Country||Deaths27 Jan||Deaths27 Feb||Deaths26 Mar||Deaths2 Apr||Deaths9 Apr||Deaths16 Apr||Deaths23 Apr|
|China||106||2 747||3 287||3 318||3 335||3 342||4 632|
|Europe||–||14||14 143||34 406||61 061||88 171||110387|
|North America||–||1 334||6 249||15 232||29 564||49 655|
|Rest of the World||–||43||2 503||4 126||7 810||12 699||18 352|
|Total||106||2 804||21 295||48 276||88 536||134685||184263|
 North America is Canada and the US
If the current trend continues the total number of deaths will be around 240 000 in a weeks’ time. The USA, Spain, Italy, France and the UK have today 72.7% 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 24 894 cases and 1 237 deaths. How is the virus spreading in the SADC region? There are only 4 999 cases reported in the SADC region and 122 deaths.
Table 3: Coronavirus cases and deaths in the SADC region – 2 – 23 April 2020
|SADC country||Cases2 Apr||Cases9 Apr||Cases16 Apr||Cases23 Apr||Deaths2 Apr||Deaths9 Apr||Deaths16 Apr||Deaths23 Apr|
|South Africa||1 353||1 845||2 506||3 635||5||18||34||65|
|Total||1 791||2 555||3 472||4 999||23||52||78||122|
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. The economic costs are spiralling and one can only hope that more testing is done to assess the risks and that we gradually opening up on the 5th of May or earlier.
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 one below illustrate that the peak has been reached and we are in a declining trend. We will not reach zero cases soon, but we have to manage the risks strictly.
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 four week decline in the growth of cases and deaths occurred.
Graph 2: COVID 19 cases and deaths in Africa and the rest of the world
Source: Compiled from Worldometers data
From the data which is available one cannot see that a third wave is on the way as the WHO is claiming. The above graph will be included in the future weekly publications.
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 3: MSCI World Index
Source: MSCI Index
The MSCI index was at 2401 on 22 February 2020 and closed on Tuesday at 1932, a fall of 19.5%. Markets are getting nervous again. The lockdown in many countries led to a decline in the demand for oil and on Monday the futures of Brent oil fell to US$ 40 and increased on Tuesday to US$ 17 a barrel. Storage capacity has reached its limits and Namibia will benefit through lower fuel prices in future.
Table 4: Selected international commodity prices
|Winners for Namibia|
|Energy: Brent oil||-20.13%||-70.58%|
Source: Trading economics. 23 April 2020
The commodity prices relevant to Namibia reached a turning point and with the weakening exchange rate one can probably see an increase in exports from May onwards.
The N$ is currently trading 18.8 to the US Dollar and 20.4 to the Euro. Economic growth can thus come in 2020 from declining imports and increasing exports due to the weakening exchange rate. The significant change in the exchange rate is shown in the graph below:
Graph 4: The N$ against the USD
Source: Bank of Namibia
The Rand was a reasonable strong currency until Jacob Zuma became the President in 2009 and the state capture started in South Africa. The appointment 2017 of Cyril Ramaphosa as President had as a result the strengthening of the Rand and the market expected that the SA economy will be management better. Moody’s downgrade of South Africa to junk status on 28 March of 2020 and the economic decline due to coronavirus pandemic saw the Rand tumbling to the current level of N$ 18.8 to the US$.
Compiled by: Rainer Ritter
23 April 2020