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Finance - News around Africa - Profiles - March 6, 2020

Coronavirus to Knock $4billion Off Africa’s Product Sales

Coronavirus Africa sale
One of Africa’s biggest refineries, located in Nigeria

As the worldwide spread of the Coronavirus virus passes 80,000, a new report warns that the Africa sub-Saharan product sales could suffer a great deal, even if there were no outbreaks of the disease on the continent.

According to the Overseas Development Institute (ODI), the rapidly spreading Coronavirus could impact sub-Saharan Africa by as much as $4 billion in product sales, with oil and copper prices sharply declining in recent months. Globally, trade-related losses could rise to $360 billion, according to the institute.

Already in Nigeria, there are reports of oil traders struggling to find buyers for 55 crude oil cargoes. The World Bank said it will provide up to $12 billion to developing countries responding to coronavirus. With the rapidly spreading coronavirus wiping $5 trillion off global stocks, as the deadly virus spreads to other countries, including Nigeria, Africa’s largest economy and the most populous.

  • “By paralyzing the world’s largest importer and second consumer of oil, this virus attacks the heart of the global economy; China accounts for more than 16% of the world economy. With China stopped, economic activities around the world are directly and indirectly affected. As if the ‘Covid-19’ hit globalization at its heart,” Mahaman Laouan Gaya, former Secretary-General of African Petroleum Producers’ Organisation (APPO), said last month.

Last month, the Organization of Petroleum Exporting Countries (OPEC) lowered the outlook for rising oil demand for 2020 for coronavirus outbreaks from China, saying,  “Evidently, the timing of the outbreak exacerbated the impact on transportation fuel demand in China, as it coincided with the Chinese Lunar New Year holidays, as millions of Chinese return home to celebrate with family members and friends, or travel abroad.”

  • However, the market “reacted strongly” as “Covid-19 risks have been priced so aggressively across various asset classes” causing fear that “recession in the global economy may be a foregone conclusion,” according to analysts cited in a Harvard Business Review (HBR) article.

While a closer look may reveal that a recession “should not be seen as a foregone conclusion,” the analysts said market sentiment could be misleading, “recessionary risk is real” And that major economies ‘ susceptibility to coronavirus and other disruptions make a recession more likely.

READ ALSO: Price Regulation: Coronavirus causes OPEC to slash Global Oil Demand Forecast for 2020

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