Global auditing firm McKinsey & Company is estimating that Ghana and African countries would lose up to $200 billion in 2020 due to the covid-19 coronavirus pandemic.
A research conducted by the firm said the pandemic will lead to a cut of 3 to 8 percentage points to Africa’s GDP growth and that countries that are heavily reliant on crude oil revenues would be the hardest hit.
Already, Ghana’s Finance Minister Ken Ofori-Atta has drastically reduced Ghana’s GDP growth rate projections for both 2020 and beyond.
In the report released last week and titled; “Tackling COVID-19 in Africa” the auditing firm released its predictions this week to give an outlook of Africa’s economies amid the pandemic.
The auditing firm predicts that African economies could experience a loss of between $90 billion and $200 billion in 2020.
“We find that the pandemic and the oil-price shock are likely to tip Africa into an economic contraction in 2020, in the absence of major fiscal stimulus.”
Since the outbreak household and business spending and travel bans have reduced significantly because most countries are on lockdown. Also, manufacturing has slowed down globally.
Most of the economies in Africa are largely informal and traders in these economies are unable to access goods that usually come from China, the research noted as it prescribes more doom for African economies with a total GDP of about US$ 2.5 trillion.
There are no guarantees when the pandemic will ease and if it continues for months, the experts say there would be massive disruption to livelihoods of millions of people in Africa.
The auditing firm is proposing that an ‘Africa Recovery Plan’ detailing extensive stimulus package or economic development plan should be put in place.
They also recommended ‘Africa Solidarity Fund’ so businesses and individuals could contribute to a fund earmarked for immediate relief for the most vulnerable households and businesses.
Already many African countries, including Ghana are setting up funds seeking contribution to help handle the economic impact of the pandemic.