The coronavirus, which has brought economic activities in one of the world’s largest economies, China, to a standstill, could trigger a global economic recession if measures are not put in place to curb the outbreak as soon as possible, the Executive Director of Financial Market Sales at the Standard Chartered Bank Ghana, Mr Jojo K. Bannerman, has said.
He said the virus was impacting the world differently from the way other previous outbreaks have due to the importance of China to the global economy.
China now accounts for 20 per cent of global GDP versus nine per cent during the SARS outbreak of 2003.
Mr Bannerman was speaking in an interview with the Daily Graphic on the economic impact of the COVID-19 virus.
“I agree 100 per cent that if the outbreak becomes a global pandemic, which is the worst-case scenario, then clearly we are likely to experience a global recession,” he stated.
The virus has now infected about 88 countries outside of China.
Commenting on how a possible global recession would affect Ghana, he said “while we may not experience a recession in Ghana, we are likely to experience lower growth output.”
“Already, oil makes up about six per cent of the country’s revenue.
The forecast in the 2020 budget for Brent Crude was around US$62.6 and its now selling below US$32 due to the outbreak of the virus which has reduced demand for oil products and compounded by an increase in supply from Saudi Arabia as a result of Russia’s refusal to reduce oil production.
Hence, there is potential impact on government’s oil revenue which may result in lower growth in the oil and gas sector and may also translate into a lower industrial growth,” he explained.
Global market volatilities Highlighting the impact of the virus on global market volatilities, he said the US and European economies were hugely impacted by trade activities in China, 40 per cent imports from and 27 per cent exports to China, and as a result, stock markets in the US and Europe were beginning to lose significant value.“The price of oil also fell below US$40 per barrel for the first time since 2016 and we are seeing the impact across various commodities,” he noted.Cocoa prices fell 12.6 per cent year to date from 2,898 to 2,530 USD per metric tonne, while Gold prices have increased by 10.6 per cent from 1,517 to 1,678 USD per troy ounce.The entire […]
