We need deliberate measures to mitigate the economic disruptions of coronavirus

OPINION

By Patrick Katabaazi

This virus that started in China and later spread to most countries has shaken the globe with leading countries showing signs of economic disruptions.

As a matter of fact, China has shut down factories in areas affected by the virus as a preventive measure, causing supply chain disruptions and affecting the mobility and near-term employment prospects of migrant workers.

Outside China, the outbreak has also affected global supply chains, as other governments have also taken immediate steps to slow the spread of the virus.

The Harvard Business Review predicted that the peak of the impact will occur in mid-March, "forcing thousands of companies to throttle down or temporarily shut assembly and manufacturing plants in the U.S. and Europe."

This again will disrupt global supply chains as well as demand for goods and services in the affected economies. The impact will definitely not be restricted to the  USA but globally as exports tumble.

In Uganda, the Central bank Governor, Professor Emmanuel Tumusiime Mutebile says that business is likely to slow down as access to China is curtailed. This is based on the fact that Uganda imports 25% of her goods from China hence a direct impact on the country's GDP projections.

There is considerable uncertainty regarding the duration and severity of the outbreak and if it persists for an extended period, the effect on global economic activity is likely to be larger than currently projected.

So far, several countries in sub-Saharan Africa have officially been affected by the COVID-19 disease including Nigeria, Egypt, Algeria, South Africa and Senegal and the economic consequences of the virus outbreak are slowly getting felt on the continent.

Italy has started countrywide lockdown and stock markets around the world have experienced unprecedented meltdown.

The potential collapse of stock markets and possible recession for key countries such as USA, UK, Germany and France bring forth many economic challenges for other countries not only because of the interconnectedness but rather because of trade and international development cooperation support.

The USA, for example, is moving towards providing a stimulus package to cushion companies from adverse effects of the coronavirus. These unexpected expenses occasioned by the virus shrink space for technical cooperation towards developing countries that might also affect NGOs and other non-state actors that are reliant on donations and other forms of support from the West.

Private sector should also brace the potential losses arising out of trade as lockdowns loom. Limited functionality of industries and transportation lines has negative effects on the movement of goods and services particularly in Africa where there is over-reliance on the importation of essential goods.

As we embrace measures to counter the coronavirus let state and non-state actors prepare for the potential adverse effects. It is also a reminder that much as international trade is important for national development, boosting domestic industries is equally critical.

It is therefore important that governments make strategic provisions for financing activities aimed at prevention, treatment and management of the coronavirus. Regional blocks and indeed the African Union should already be having discussions on how to fight back against this novel infection because efforts or a lack of it in one country has potential impacts on others.

The writer is the Executive Director at the Centre for Budget and Tax Policy