This report presents the impact of the COVID-19 Pandemic and implications for SADC Region as monitored by the SADC Macroeconomic Subcommittee, supported by the SADC Secretariat. It provides policy recommendations to Member States. (COVID-19 SADC Economy Report)
The global economy before the COVID-19 outbreak was struggling to regain a broad-based recovery due to the lingering impact of growing trade protectionism, trade disputes among major trading partners, falling commodity prices and economic uncertainties in Europe over the impact of the UK withdrawal from the European Union.
As of December 2019, prospects in terms of fiscal deficit and public debt were mixed. While some Member States had made commendable improvements in their fiscal positions, a majority were already grappling to manage their increasing public debt, which was on the brink of breaching the regional threshold of 60 per cent of GDP. The Fiscal Monitor released by the International Monetary Fund (IMF) in April 2020 highlighted that COVID-19 outbreak and its financial and economic consequences will cause a major increase in fiscal deficits and public debt load in 2020. Fiscal policy measures that are implemented include government-funded paid sick and family leave, transfers, unemployment benefits, wage subsidies and deferral of tax payments. The increasing public debt levels will put additional burden to the Member States resources as debt service costs increase.
The impact of COVID-19 is changing the economic landscape around the world including SADC region. As the pressure mounts, industries are moving swiftly to build resilience, while governments are mobilizing to safeguard citizens and manage the social and economic fallout. Combining these factors with the on-going lockdowns around the globe, the platform to trade fairly is slowly being skewed with some players losing while others winning.
As such, SADC Member States should consider the following policy interventions and recommendations to keep economies afloat in the face of the worst global economic downturn:
(i) While the focus should be health and humanitarian sector due to the damage caused by the virus, there is need also to strengthen early warning systems, response and mitigation of pandemics and disasters that have proved to be major threats to education, tourism, informal sector and other sectors.
(ii) Member States should consider developing Roadmaps and Action Plans that prioritize investments and channel scarce resources to identified economic sectors to resuscitate their economies, strengthen resilience and improve competitiveness. Relaunching strategies should be premised on the existing SADC macroeconomic convergence programme.
Full report can be accessed here: Impact of COVID-19 on SADC Economy