2020/33 Coronavirus and the World Economy

Coronavirus and the World Economy

The coronavirus has arrived in the most remote place of the World and 213 countries and territories are affected. Namibia has now 12 406 cases and South Africa 708 359. The latest cases and deaths are the following:

Table 1: Coronavirus cases – 28 May –22 October

Region/CountryCases28 MayCases25 JuneCases30 JulyCases27 AugCases01 OctCases22 Oct
China82 99583 44984 16585 00485 41485 729
Europe1 509 0131 647 9921 866 6092 214 4003 518 2175 669 252
Africa121 077329 888874 8041 204 1341 480 0151 667 693
North America1 833 3222 564 9504 683 5076 126 7827 611 7828 790 773
Rest of the World2 243 6964 916 8849 678 841 14.70521 529 76525 273 738
Total5 790 1039 543 163 17.188 24.33534 225 19341 487 185

Source: worldometers.info

From the middle of March the epicentre of the coronavirus has shifted from China to Europe, the US and then to the rest of the World with 62.2% of all reported cases. There is a second wave in Europe currently. The US reported 8 584 819 cases and 227 409 deaths. Only 4.0% of the reported cases and 3.6% of the deaths are on the African continent. 

Table 2: Coronavirus deaths – 28 May –22 October

Region/CountryDeaths28 MayDeaths25 JuneDeaths30 JulyDeaths27 AugDeaths/01 Oct Deaths/22 Oct
China4 6344 6344 6344 6344 6344 634
Europe165 662179 129184 792186 461196 461211 153
Africa3 6638 85619 64928 56635 73740 920
North America[1]108 872132 766162 757192 747221 130237 235
Rest of the World74 601159 901297 375417 268561 432642 399
Total357 432485 294670 207829 6761 019 8301 136 341

Source: worldometers.info

[1] North America is Canada and the US

If the current trend continues the total number of deaths will be around 1 192 000 in a weeks’ time. The USA, Brazil, UK, Italy, Spain, France, Mexico and India have today 64.8% of the number of deaths reported in the whole World. 

The African continent reached a turning point and all countries reported 1 667 693 cases and 40 920 deaths. There are only 812 800 cases reported in the SADC region and 20 725 deaths. South Africa is dominating SADC with 87.2% of the cases and 90.4% of the number of deaths.

 Table 3: Coronavirus cases and deaths in the SADC region – 30 July – 22 October 2020

SADC countryCases30 JulCases27 AugCases01 OctCases22 OctDeaths30 JulDeaths27 AugDeaths01 OctDeaths22 Oct
South Africa471 123615 701674 339708 3597 49713 50216 73418 741
Madagascar10 31714 55416 45416 81099181232238
Zambia5 24911 37615 75916 000146282282346
Namibia1 9866 43211 26512 406959121133
DRC8 9319 91210 68511 066210254272303
Mozambique1 7483 5908 72811 33111216179
Zimbabwe2 8796 2517 9198 21541179228236
Angola8122 3325 7258 33833103183255
Malawi3 7385 4745 7735 864103173179183
Eswatini2 5514 3875 6175 8054088109116
Botswana8041 6333 1725 609261621
Lesotho5761 0511 5951 91813313643
Tanzania50950950950921212121
Mauritius34434838141910101010
Seychelles114136144151
Total511 681683 685766 096812 8008 23514 91018 53420 725

Source: Worldometers.info

Graph one below illustrate that the peak has been reached and we are in a declining trend which has come to an end in week 32. 

Graph 1: Weekly change of the World’s coronavirus cases and deaths

The graph above depicts the weekly change since beginning of April 2020 in the whole World of reported cases and deaths. For the first time the declining trend reversed and there is a slight increase in the number of cases, especially in Europe. 

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 can see that the declining trend continuous with a further decrease in the deaths. Which countries are the worst affected countries according to deaths and recorded cases? Peru has replaced Belgium on top of the list with the number of deaths per population and Qatar with the number of cases. A high number of cases do not automatically mean a high number of deaths, as the Qatar example demonstrate.

Table 4: Worst affected countries according to deaths and cases

CountryDeaths/1M pop.Total cases/1M pop.
Peru1 025 
Belgium908 
Spain735 
Bolivia730 
Brazil730 
Qatar8046 374
Bahrain 45 902
Israel 33 415
Panama 29 163
Kuwait 27 631
South Africa31511 898
Germany1194 666
Namibia524 856

Source: Worldometers

What is the trend in the Namibian reported cases of Covid-19? We can firmly establish already a turning point after 23 August and a strong declining trend is visible from the 3 day moving average. 

Graph 3: The Namibian Covid-19 cases

Source: Worldometers

The World economy is out of 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 4: MSCI World Index

The MSCI index was at 2403 on 22 February 2020 and closed on Wednesday at 2423, a slight increase of 0.8%. The slight decline in stock markets is also reflected by the monthly decline of -1.32% in the Baltic Dry Index (The Baltic Dry Index provides a benchmark for the price of moving major raw materials by sea). The second wave of Covid-19 cases in Europe makes investors nervous. 

Table 5: Selected international commodity prices

CommodityMonthlyYearly
Winners for Namibia  
Energy: Brent oil0.53%-36.76%
Gold2.88%25.45%
Uranium-2.49%18.11%
Copper7.25%12.60%
Zinc3.61%10.69%
Losers  
Lead-3.40%-6.11%

 Source: Trading economics. 22 October 2020 

The commodity prices relevant to Namibia reached a turning point seventeen weeks ago in the past week prices strengthened again. Oil prices increased in the past week and for the month by 0.53%. The exchange rate strengthened slightly this week and the N$ is currently trading 16.4 to the US Dollar and 19.4 to the Euro.

The mid-term review was presented by the Minister of Finance on 20 October and many uncertainties remain which are not reflected in the projected revenue, expenditure and GDP growth.

Table 6: Actual, estimated and predicted budget in N$ billion

 2018/19Actual2019/20Actual2020/21Estimate2021/22Projected2022/23Projected2023/24Projected
GDP178,208178,940174,063183,139193,212203,839
GDP growth/year1.1%-1.6%-7.9%2.2%3.9%4.2%
Total revenue55,88258,52555,17955,07557,54162,976
Potential Expenditure65,10867,34372,77268,48069,84971,246
Pot. Budget balance(9,226)(8,819)(17,593)(13,404)(12,308)(8,270)
% of GDP-5.2%-4.9%-10.1%-7.3%-6.4%-4.1%
Total debt87,533100,400119,756134,140147,430156,682
% of GDP49.1%56.1%68.8%73.2%76.3%76.9%
Add. Domestic debt 8,40812,11711,15412,3088,270

 Source: Ministry of Finance

The fiscal projections are very conservative and the economic growth projections reflect optimism. This optimism is reflected in the forward of the Medium-Term Expenditure Framework when the Minister said: “The fiscal policy objectives for the next three years, as COVID-19 gradually diminishing, will focus on refuelling the economy and bring it to its pre-COVID-19 growth trajectory. This will pave the way to return to fiscal consolidation path by 2021/22 and restore macroeconomic stability, reduce deficit and ensure debt sustainability. In this regard, Government will continue to strengthen economic partnership with private sector and other stakeholders to optimize on domestic capacity.”

 The view by the Minister that growth can only be restored to a pre-2016 level through an economic partnership with the private sector should be supported. However, the 2016-20 economic climate led to divestiture and thus the partnership must have new qualities and totally different investor friendly policies, otherwise the required trust will not be restored.

Compiled by: Rainer Ritter                   

22 October 2020