CORONAVIRUS

There will be Golden Twenties after Covid-19

There is light at the end of the tunnel and countries and economies will recover.

In Summary

• With over two million cases globally and more than 134,000 deaths, Covid-19 is not just a health pandemic but also an economic crisis.

• Given that China is the largest exporter in the world, the drop will definitely affect many countries that are its trading partners.

ECONOMY: It cannot be worse for Kenya due to the current coronavirus pandemic
ECONOMY: It cannot be worse for Kenya due to the current coronavirus pandemic
Image: OZONE

About a few months ago, the world was not prepared for what was about to hit us.

There were no signs or warnings. It was not until December last year that the world heard of the outbreak of a deadly virus in China. Three months later, Covid-19 is all over, in almost every country. It is an unprecedented global pandemic, at least in our lifetime.

With over two million cases globally and more than 134,000 deaths, Covid-19 is not just a health pandemic but also an economic crisis.

One of the measures states have effected is banning of international flights. We all know that for inter-state trade to occur, there must be movement of goods between countries. So with limited international trade and lockdowns, economies have been hit hard.

 China, the source of the virus, has had its economy affected tremendously. According to recent statistics, Reuters expects China's growth rate to slump to 4.5 per cent in the first quarter of this year from six per cent in the previous quarter. That would be the slowest pace since the financial crisis. With much of the country in lockdown [which has since been lifted], the virus could affect up to 42 per cent of China's economy, according to Standard Chartered.  

Given that China is the largest exporter in the world, the drop will definitely affect many countries that are its trading partners. Kenya, for example, has already had its fair share since China is Kenya’s biggest trading partner, accounting for 17.2 per cent of Kenya’s total trade.

According to the statistics based on the import and export permits from the Kenya Tradenet System (KenTrade), there is a notable decrease in the number of permits being obtained by Kenyans to import from China. In September 2019, Kenya recorded permits of goods worth of Sh66 billion, while in January the permits dropped to goods worth Sh54 billion.

Kenya also exports to China. Last year, we saw a huge increase in the export of avocados due to the simplified export processes by KenTrade’s single window system. This was not only a great boost to the economy but also to avocado farmers in the country.

Kenya's exports to China are mainly agriculture-based and include coffee, specialty teas, cut flowers and avocado. Unfortunately for us, the export of our agricultural products has also been affected due to the reduction in air freight volume; cancelled shipping vessels and drop in export volumes as a result of the pandemic. Other sectors in the country such as tourism, manufacturing, health and service have also taken a hit.

In spite of the ongoing negative outcome, there is hope for a brighter tomorrow. Governments are undoubtedly doing their best by implementing measures to help fight the pandemic.

Kenya, for example, has introduced a 10-hour curfew and has also introduced a tax relief to low-income earners. There is light at the end of the tunnel and countries and economies will recover.