COMESA region is projected to grow by 0.6% in 2020 down from 5.2% attained in 2019. This is according to a report on the macroeconomic developments in the region presented at just concluded COMESA policy organs’ meetings.
The low projected growth in 2020 reflects largely the impact of COVID-19 containment measures that includes quarantine, lockdowns, travel restrictions and border closures, among others.
The projections considered the development in economic growth, monetary policy and exchange rate, external current account including grants, overall fiscal balance, government debt, inflation rate, reserve accumulation, medium term prospects and recommendations and risks to outlook.
In 2019, for example, monetary policy stance varied depending on the extent to which countries were exposed to domestic and external shock. However, in 2020 the region’s Central Banks face new challenges posed by COVID-19 pandemic including a shift of priority to crisis management objectives instead of strictly price stability.
According to the report, external current account including grants improved slightly in the region, averaging about -4.8 percent of GDP in 2019 as compared to -5.2 % in 2018. This was attributed to persistent trade imbalances due to a combination of declining export demand and relatively inelastic import bills, and in some cases late disbursement of external aid flows faced by most countries in the COMESA region.
“The region’s average fiscal deficit including grants as a percentage of GDP widened slightly from -4.3% in 2018 to -4.9% in 2019 as the region continued to increase infrastructure investment,” according to the report prepared by the Secretariat.
COMESA’s average inflation rate was 13.3% in 2019 as compared to 9.2% in 2018 and is projected to increase to 15.2% in 2020 due to plummeting commodity prices and disruptions in food supply chains.
The external reserve position for the region in 2019 was an average of 3.8 months of import of goods and services compared to 3.1 months of import of goods and services in 2018 and is expected to decline to just three months of import of good and services in 2020.
The report concludes that the immediate challenge for most countries in the region will be stopping the COVID-19 pandemic. This should entail continued effort to sustain public health gains including contact tracing, quarantine and isolation, treatment and stopping the spread.
The Secretariat urged member countries to use macroeconomic policies to speed up post-COVID-19 recovery.