UNCHARTERED TERRITORY

Covid-19 triggers unprecedented global economic turmoil

Economic loss owing to a lockdown will be devastating to thousands of households.

In Summary
  • It is no irony that the sector that is most ravaged is the one that is responsible for spreading the coronavirus from China’s Hubei province.
  • The descent of airlines globally is spectacular.
innovative: A Jua Kali artisan inside his furniture workshop in Nyeri town. A global report on furniture business shows Kenya is the largest producer in East Africa.
innovative: A Jua Kali artisan inside his furniture workshop in Nyeri town. A global report on furniture business shows Kenya is the largest producer in East Africa.

Human civilisations have folded into ruins under the assault of pandemics such as the Bubonic Plague of the mid-14th Century. In the modern era pandemics pose a veritable threat to political and economic viability of nations.

The coronavirus pandemic reveals that shifts in the equilibrium between human beings and our microbial predators can cause not just a health crisis but far-reaching socioeconomic and political upheaval.

The abruptness of the turmoil in the wake of Covid-19 pandemic, evidenced by near shut-down of countries and major global cities, is unprecedented in peacetime. What we are witnessing can be likened to wartime adversity. Vital operations of functional economic order are grinding to halt across the globe.

The impact of the coronavirus on the global economy is like no other we have known. The global economy has gone from full-speed to a near freeze since January. This is because of the measures taken by nations and cities to slow the spread of the SARS-Cov2, the virus that causes Covid-19.

The measures, especially instituted to maximise what is now popularly known as social distancing, has wrought nothing short of havoc on work, commerce, leisure and travel. It is no irony that the sector that is most ravaged is the one that is responsible for spreading the coronavirus from China’s Hubei province. The descent of airlines globally is spectacular.

As East African governments enforce measures to prevent the spread of coronavirus, they must tread a fine line between keeping the economy running and keeping large populations safe from coronavirus. Aggressive lockdown will be problematic, especially because of the informal, outdoor nature of our economies.

The International Air Transport Association (IATA) projects a possible revenue dip to of up to $113 billion this year. Here at home Kenya Airways has sent nearly 4,000 employees on unpaid leave. The anticipated depth of the nosedive is such that airline business will never be the same again.

Industrial output in China, the global hub of manufacturing, has dipped by 13.5 per cent in the last three months. NASA’s pollution monitoring satellites have detected a significant drop in nitrogen dioxide, a major greenhouse gas from oil and coal consumption in China.

As Europe and the United States of America go into lockdown, mandating non-essential business operations to shut down, disruption of the global economy will go full tilt. US treasury officials warn that unemployment could climb to 20 per cent if aggressive interventions are not instituted.

As East African governments enforce measures to prevent the spread of coronavirus, they must tread a fine line between keeping the economy running and keeping large populations safe from coronavirus. Aggressive lockdown will be problematic, especially because of the informal, outdoor nature of our economies.

Micro and small enterprises are the lifeblood of our economies. An estimated 75 per cent of Kenyans work for enterprises that employ less than 10 people. The pain of economic loss owing to a lockdown will be devastating to hundreds of thousands of households. Hence, every conceivable measure must be taken to protect business owners and employees.

One reason the situation could get horrific rapidly is that economic frailty is self-reinforcing, with production and consumer demand falling as governments enforce lockdown and loss of income surges. We are in unchartered territory.