World Bank sees 'major global recession' due to pandemic

World Bank Group President David Malpass on Friday said the rapidly spreading COVID-19 pandemic was expected to cause a “major global recession” that would likely hit the poorest and most vulnerable countries the hardest.

“We intend to respond forcefully and massively with support programs, especially for poor countries,” Malpass said in a posting on the LinkedIn networking site, adding that he planned to speak soon with the leaders of Ethiopia, Kenya and other countries.

Kenya's economy has started feeling the impact of coronavirus with the Central Bank of Kenya revising downwards its 2020 growth projection to 3.4 per cent, from an initial 6.2 per cent.

Last month, Kenyan firms saw a much sharper decline in operating conditions, the latest Stanbic Bank-Purchasing Managers' Index survey indicate.

The downturn was widely due to the outbreak of coronavirus in the country, which led to a large drop in consumer demand and client orders.

Businesses consequently reduced activity and employment, while demand for inputs fell at the quickest pace since late-2017.

Shortages of raw materials contributed to a faster rise in overall input costs.

"The sharp drop in the PMI doesn’t really come as a surprise. The negative impact from Covid-19 is quite broad-based and is likely to affect various sectors across the economy," said Jibran Qureishi, regional economist East Africa, StanbicBank. 

According to Qureishi, the tourism and floriculture sector have been hit the hardest so far, admittedly due to global cross border travel restrictions and waning luxury spending in markets such as Europe.