Even without a single confirmed case, sub-Saharan Africa may be the region hardest hit outside of Asia by the spread of the coronavirus.<\/p>\n
The outbreak has shut down entire swathes of the Chinese economy, threatening world economic growth and curbing appetite for oil and metals that are the lifeline of many African nations.<\/p>\n
A slowdown in the No. 2 economy and a 5% drop in oil prices over one year could mean $4 billion in lost export revenue for sub-Saharan Africa, or the equivalent to 0.3% of its gross domestic product — more than any other continent outside of Asia, according to a study by the Overseas Development Institute.<\/p>\n
\u201cMany developing countries are increasingly dependent on China for trade, both for imports and exports,\u201d Dirk Willem te Velde, principal research fellow at the institute, said by phone from London.<\/p>\n
\u201cIf you want to raise the quality of your growth that is more job intensive and more resilient to shocks then you have got to diversity, and when you have a shock like this it makes you realize that.\u201d<\/p>\n
The International Monetary Fund slashed its economic\u00a0growth projection\u00a0for Africa\u2019s top oil exporter, Nigeria, to 2% from 2.5% because of a decline in oil prices.<\/p>\n
The drop has led to pressure on the naira given crude accounts for 90% of the West African nation\u2019s exports. Weaker demand from China also puts other resource-dependent economies such as Angola, the Democratic Republic of Congo and Zambia at risk.<\/p>\n
Crude prices are down about 11% this year. Copper and iron ore prices have declined 8% and 1.5% respectively this year.<\/p>\n
Alarm bells<\/strong><\/p>\n African central bankers are starting to sound alarm bells.<\/p>\n \u201cIt is a catastrophe that is unfolding,\u201d Bank of Namibia Governor Ipumbu Shiimi told reporters after cutting interest rates on 19 February. \u201cWe don\u2019t know exactly where and when it is going to peak but I think it is already starting to disrupt economic activities.\u201d<\/p>\n The arid southwest African country sells almost a fifth of its exports, mostly diamonds and copper, to China.<\/p>\n The South African Reserve Bank will take into account the virus impact on the global economy at its next rate-setting meeting, said Chris Loewald, a member of its monetary policy committee.<\/p>\n \u201cIt\u2019s quite clear, we have seen the copper price being affected, it\u2019s reduced, so that obviously affects our economy very directly,\u201d Zambian central bank Governor Denny Kalyalya said. \u201cThe full extent of that is not calibrated at this point but definitely, it has a negative effect.\u201d<\/p>\n Unlike when the SARS epidemic started in China in 2003, the Chinese economy is now more integrated into the rest of the world, representing 18% of global GDP. In just over a decade, the Asian nation has displaced the U.S. as Africa\u2019s single largest trade partner.<\/p>\n Not Normal<\/strong><\/p>\n A slump in Chinese consumer spending will hit smaller, niche export markets too.<\/p>\n \u201cThis will have an impact on other African countries who are actively trying to export more goods to China,\u201d said Leah Lynch, deputy director at Development Reimagined, a consultancy based in Beijing. Examples of what would be affected by a slowdown in China\u2019s food and beverage sector include Namibian beef, Rwandan coffee, Kenyan avocados and South African citrus, she said.<\/p>\n Still, Africa could bounce back quickly once the outbreak is brought under control, said Razia Khan, chief economist for Africa and Middle East with Standard Chartered Bank.<\/p>\n \u201cAs this does not have the normal characteristics of a global demand slowdown, there is little reason to believe that the traditional relationship between African growth and global growth will hold,\u201d Khan said, referring to Africa\u2019s usual sluggish response to a global upturn.<\/p>\n \u201cThis time, with expectations of a V shaped recovery in China, that long lag may not be in place.\u201d<\/p>\n
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