The latest coronavirus outbreak is the worst so far in terms of its sheer intensity. But it is made much worse by the fact that China is a much more important part of the global economy than it was during previous, more benign versions of the virus.
The effects on Ghana are more intense too, because its economic relationship with China is stronger than ever before. Thus, even before the first case of infection is recorded in Ghana, the virus is already having several severe impacts on the country’s fortunes.
Those impacts are coming in two forms. One is indirect – by slowing global economic growth, it is by extension curbing Ghana’s own growth potentials within the global economy. The other is direct – its effects on bilateral trade and investment between Ghana and China, on global oil and gold prices and on tourist flows between the two countries are very substantial.
However, some of those effects are positive rather than negative, at least for now. This makes for a complex, rather than a straight forward, correlation between the out break of coronavirus and Ghana’s economic fortunes.
Inevitably though, a slow down in global economic activity is no good for Ghana and indeed, puts the country’s Gross Domestic Product growth target of 6.3 percent for 2020 under threat. China’s extraordinary economic surge over the past 40 years has resulted in it becoming the world’s second biggest economy, with a GDP of US$13.6 trillion (compared with US$20.5 trillion for the US). Annualised growth of 7% and more – way beyond the capacity of developed economies – has become the norm.
China reached this position by supplanting the US as the fulcrum of global trade. Beijing is the largest trader of merchandise in the world, and is fast catching the US in commercial services following an 18% growth spurt in 2018. The long-held practice of sourcing components and widgets from Chinese companies, and the country’s vast and growing domestic market, has encouraged thousands of foreign businesses to open their own factories on the mainland, join local distribution networks and open shops.
China is also central to a diverse range of global supply chains: much of the world’s raw materials travel to China before being turned into a manufactured product. Last year’s battle with the US over import tariffs on billions of dollars’ worth of goods illustrated the power of the Chinese economy to disrupt and disturb the global outlook.
China’s economy grew by 6% last year according to Beijing’s official statistics agency, which was the lowest rate for almost 30 years and a big drop from the 10.2% achieved in 2010. There were hopes that 2020 would prove to be a period of recovery following a protracted trade war during 2019 with the US Trump administration.
The coronavirus makes that unlikely. Most analysts are still predicting growth well above 5% for the Chinese economy, based on what is known so far about the virus’s spread, and the likely impact on consumers, businesses and government.
But Zhang Ming, an official in the Chinese Academy of Social Sciences, is gloomier. He frets that “GDP growth in the first quarter of 2020 could be about 5%, and we cannot rule out the possibility of falling below 5 percent”.
Oil prices have come under pressure too, amid anticipation of a slowdown in global demand, as have other raw materials. China is the world’s largest crude oil importer and also a big consumer of metals such as copper and iron ore.
This is one area where Ghana will feel direct effects of the viral out break. In early February, oil prices on the international market fell to US$56 a barrel, the lowest in a year and since then they have fallen much further, to US$51.61, and worries about a large demand shock are weighing down on global economic activity.
Global oil prices are now well below the Government of Ghana’s own projected benchmark price for 2020, of US$58.66 which itself was considered conservative at the time it was determined, being considerably lower than 2019’s US$66.76 per barrel. Based on government’s production forecast for 2020, of 70.2 million barrels (192,336 barrels per day), the projected petroleum revenue for this year is thus US$1,150.84 million. But the immediate effects of the coronavirus are already putting this target in jeopardy.
But while government is ruing the situation, consumers of petroleum products across Ghana are gearing up to benefit, through lower prices at the pumps. The price build up computations during the current pricing window have gone negative, in part because of lower global market prices and in part because the cedi has appreciated significantly against the US dollar over the past few weeks. Instructively, GOIL, which is recognized as a market leader with regards to product pricing in Ghana’s downstream petroleum products market, has already announced a price cut at its petrol stations.
The other major effect on the Ghanaian economy is indeed that relating to foreign exchange rates. Since travel to heavily coronavirus infected China has become most unappealing, imports from that country have slumped, and the resultant appreciation of the cedi has evidenced just how much of demand for forex in local currency markets is to meet payments for Chinese imports. By the middle of this week the US dollar was trading for below GHc5.30, down from about GHc5.50 just a month ago.
Again government will have to lick some wounds though, as revenue from import duties will inevitably slump. Conversely though, imported inflation will slow considerably, compensating both government’s purse and those of households nationwide. Being that Ghana is heavily import dependent, and relies largely on primary commodities for its export revenues, there will be far more gainers than losers from an appreciating cedi. However, sooner than later, the unavailability of relatively cheap consumer goods and industrial inputs from China will begin to show up, to the chagrin of households and enterprises alike.
Perhaps the biggest gain for Ghana though will come from the price surge for gold on global markets, as economic uncertainties persuade investors all around the world to retreat into holding gold as a safe haven.
At the start of this week, gold climbed to a high of US$1,691.70, its highest price since early 2013, before retreating a little. Being Africa’s top gold producer, Ghana stands to gain heavily from the ongoing price rally.
These are all short term phenomena however. Over the longer term, the continued expansion of the coronavirus around the world has the potential to curb global trade and investment, and Ghana would be just one of many victims of this.
But the worst scenario is that whereby coronavirus spreads into Ghana itself. So far the hope is that such viruses do not thrive in high temperatures and indeed tropical Africa has been virtually free of infection so far. Optimists point out that its predecessors, MERS and SARS, did not get a significant foothold in tropical Africa either. But Ghana’s government is prudently taking steps to ready the country for an out break all the same.
If it does arrive – and thrive – in Ghana, then government’s expenditure on containing it will far outstrip any gains to be made from other aspects of the situation. An out break of Coronavirus in Ghana would be a disaster for both the public and the private sectors. Anything short of that is bearable, partly inconvenient and partly convenient.
What coronavirus is?
A coronavirus is a kind of common virus that causes an infection in your nose, sinuses, or upper throat. Most coronaviruses aren’t dangerous.
Coronaviruses were first identified in the 1960s, but we don’t know where they come from. They get their name from their crown-like shape. Sometimes, but not often, a coronavirus can infect both animals and humans.
But in early 2020, after a December 2019 outbreak in China, the World Health Organization (WHO) identified a new type, 2019 novel coronavirus (2019-nCoV), which can be fatal. The organization named the disease it causes COVID-19.
The outbreak quickly moved from China around the world. It spreads the same way other coronaviruses do: through person-to-person contact.
Most coronaviruses spread the same way other cold-causing viruses do: through infected people coughing and sneezing, by touching an infected person’s hands or face, or by touching things such as doorknobs that infected people have touched.
The ongoing respiratory infection, recently named COVID-19 is closely related to SARS and MERS two past severe coronavirus outbreaks.
- Middle East Respiratory Syndrome (MERS): About 858 people have died from MERS, which first appeared in Saudi Arabia and then in other countries in the Middle East, Africa, Asia, and Europe.
- Severe Acute Respiratory Syndrome (SARS): In 2003, 774 people died from an outbreak. As of 2015, there were no further reports of cases of SARS.
According to the European Centre for Disease Control, the majority of the confirmed cases — more than 81,000 – are in China. More than 2,800 are confirmed outside of China in more than two dozen countries. These include: Thailand, Japan, Singapore, Taiwan, Malaysia, South Korea, United Arab Emirates, Vietnam, Cambodia, Nepal, the Philippines, India, Sri Lanka, Germany, France, Italy, United Kingdom, Russia, Finland, Spain, Sweden, United States, Canada, Australia, Belgium, Macau, Iran, Egypt, Israel, Lebanon, Brazil, Algeria, Oman, Bahrain, Switzerland and Iraq. South Korea, Italy, and Japan are the countries with the most cases outside of China.
Symptoms can show up anywhere from 2 to 14 days after exposure. Early on, they’re a lot like the common cold. You might notice fever, cough and shortness of breath.
Infections range from mild to serious. The virus can turn deadly if it leads to pneumonia, respiratory failure, or septic shock. Those most at risk of death are the elderly and people with weakened immune systems.
There is no vaccine, but America’s National Institute of Health is working on one and hopes to begin testing in several months. That testing would be for safety. If it’s safe, there would be testing to see how well it works.
There is no specific treatment for the virus. Patients are generally given supportive care for their symptoms, such a fluids and pain relievers. Hospitalized patients may need support with breathing.
How Ghana is getting ready?
Though there is no confirmed case of the coronavirus in Ghana, the Government has allocated GHc2.5 million ($456,204.38) as start-up towards the initial implementation of the national preparedness plan.
The Health Ministry has initiated a process to procure 10,000 pieces of personal protective equipment for use by frontline workers.
As part of efforts to effectively coordinate activities, Ghana’s Public Health Emergency Management Structures at national, regional and district levels have been put on high alert.
Also a National Technical Coordination Committee, with experts from various health and security agencies, has been formed and stakeholders being engaged on the disease.
The experts are from the Ministry of Health (MOH), Ghana Health Service, the WHO, Veterinary Services Department, Immigration Service, security agencies, and the Centres for Disease Control and Prevention.
In addition to screening for fever, using walk through and non-contact thermometers at the Kotoka International Airport and other designated points of entry has been deemed necessary and plans are underway to ensure all points of entry have the non-contact thermometers.
Ghana is also using Health Declaration Forms to extract salient information from travellers to assess their risk levels.
In respect of laboratory confirmation, Noguchi Memorial Institute for Medical Research has demonstrated capacity to conduct tests for confirmation.
For case management, the MOH had designated treatment centres, isolation facilities and holding places for the management of any cases that would be confirmed or suspected.
Also, the Tema General, Ga East, Ridge, and the Police hospitals as well as all the Regional and Teaching Hospitals have the capacity to treat cases.
The Ministry has conducted training for case management teams in Tema and Ridge hospitals and initiated a process to designate more centres in the highly populated areas of Accra, Kumasi, Takoradi and Tamale.
Furthermore, a national social mobilisation and risk communication emergency response has been developed for management.