(Ecofin Agency) - Due to the still ongoing coronavirus crisis which started in China last December, the country’s economy is forecasted to drop by 2.8% this year, according to the Institute of International Finance (IIF).
In a note published on March 24, the Washington-based organization highlights the new external risk Africa could face in such a scenario, as China is the continent’s first trade partner and the main commodities buyer. The covid-19 crisis itself has already had huge negative impacts on many African economies, with a sharp decline in demand from China.
Data provided by the Chinese customs showed that trade between the Dark Continent and Xi Jinping’s country slid by 17.8% between January and February this year, compared to the same period in 2019. Plus, African exports to China dropped 21.7%, and Chinese exports to Africa decreased by 13.2% over the period reviewed.
There are fears for countries such as Zambia, one of Africa's major copper exporters. Copper prices have already fallen by 19.7%. At the same time, Zambia's exports to China have fallen by 43%. Angola's exports to this partner have also fallen by 30.7%.
The resilience of several African countries is severely hit. Many of them are already establishing recovery plans with the IMF. They face risks of external imbalances and difficulties in mobilizing resources to finance their national budgets.
According to an August 2015 analysis by Moody's, few African countries will have the fiscal flexibility to adapt if a crisis occurred.