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Output growth outlook: A synchronized slowdown and contraction

By on August 7, 2020 0 97 Views

The downside risk to our overall outlook remains that the decline in growth could be deeper and more widespread as outbreaks intensify and spread more widely across the region”

~United Capital analysts

Foreign Exchange

The world is suffering from both the primary and secondary impact of COVID-19 pandemic. Africa was the last frontier to be hammered by COVID-19 and despite the late arrival of the virus and the prompt implementation of social distancing measures, the virus spread rapidly across the region, currently with about a million cases.
Notably, The World Bank has estimated that the deadly COVID-19 pandemic could cost the region between $37.0 billion – $79.0 billion in terms of output losses caused by trade disruption.
However, with the expansionary policies rolled out by both fiscal and monetary authorities across the region estimated at under $20 billion, we assume that these policies can only at best minimize the depth of contraction/slowdown.
As economies re-open, we believe that the shape, duration, and size of recovery will vary from country to country, depending heavily on the improvement in the external dynamics (global supply chain, commodity prices as well as capital flows) and the length of time required to bring economic activities back to near pre-COVID-19 levels.
We note that recovery will be more strenuous in countries with little to no monetary or fiscal space to provide large-size bailouts for economic recovery.
The downside risk to our overall outlook remains that the decline in growth could be deeper and more widespread as outbreaks intensify and spread more widely across the region.

(C) United Capital Plc

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