The Common Market for East and Southern Africa is expected to grow at just 0.6 per cent, down from 5.2 per cent recorded last year.
The revision comes at a time when a number of economies within the trading block have been shut due to Covid-19 while those that have been open have been operating at less than 50 per cent.
According to a report on Macroeconomic developments in Comesa region in 2019, the decline will mainly be driven by the impact of containment measures, decline in global demand and regional spillovers, external financial constraint and the impact of multiple shocks.
The report also notes that Covid-19 mitigation measures such as travel restrictions, quarantines, lockdowns and border closures, among others have not only disrupted economic activities but also led to mass unemployment and loss of livelihoods, especially in the informal sector.
“Decline in global demand and travel has resulted in rapid fall in trade and tourism while disruption of regional trade due to border closures has severely affected cross border trade in the region,” the report states.
The report also notes that severe contractions will be experienced in countries that mainly rely on tourism such as Mauritius, Seychelles, Egypt and Kenya, among others.
In Uganda, during of his speech, President Museveni said the country is expected to lose about $1.6b (Shs5.9 trillion) per annum as a result of Covid-19-related effects. Uganda earns at least $2b (Shs7.4 trillion) from tourism.
The report also notes that capital outflows and a fall in remittances in a number of countries has exposed such countries’ currency markets to depreciation.
This, the report notes, has been exacerbated by the effects of floods, locust invasion and collapse of commodity prices as the region struggles to contain the spread of Covid-19.
However, the report also noted that it has been difficult for economies within the region to strike a balance between conflicting objectives, which is likely to impact economic recovery in the short and long term.
“Key towards getting the balance right will depend on how effective and efficient governments in the region will be as they continue to carry out public health measures and the extent to which the public will adapt the same,” the report notes.
Going forward, the report recommends, strengthening continental value chains as a priority of every country to mitigate the uncertain global business environment.
In the medium-long term, the report notes, effective implementation of regional integration agenda and the continental free trade area will be key to strengthening regional production networks and trade as well as reduce Africa’s vulnerability to external shocks.
This, if acted upon, will consequently leading to improvements in the continent’s external current account balances.
A number of African countries continue to struggle to sustain livelihoods under lockdowns.