Question

Macroeconomics

Case study COVID-19 impact

Look at the Four macroeconomics policies

i. Economic growth

ii. Unemployment

iii. Inflation

iiii. Balance of payment

How has the Coronavirus – COVID 19 affected each of these policies in Africa? Illustrate with suitable examples

Answer 1

Answer:
Coronavirus - COVID-19 has affected each of the macroeconomic policies in Africa in following ways:

• Economic Growth : The economic growth rate of most of the countries has decreased due to COVID-19, Africa is not different from others. Most of the countries of Africa like Algeria, Sudan, Libya etc. have noticed contraction in economic growth because most of the countries all over the world were in lockdown with limited or no trade. So it has affected everyone including Africa nations as well.
• Unemployment : As economic growth has decreased, and many industries needed to shutdown for multiple weeks, and demand is also not that high even after opening the economy. Both domestic and International demand has decreased by more than 50%. So companies have layed off many employees, and decreased the salaries who are still working. Unemployment number of Sudan has increased by 20%. So most of the African countries are affected by COVID-19.
• Inflation : Because global trade has decreased a lot, and domestic market is also not working well so inflation will increase gradually, at start it can be constant because soft goods demand will decrease so the prices and necessity items becuase of hoarding will increase. But over long term it will increase because of less supply and demand of necessity goods remaining same.
• Balance of Payment : Balance of payment will be negative, there would be more spending on importing things than exporting things. There would be an increase in trade deficit number of the government. To cope up with this pendamic government is also providing many stimulus package all over african countries which will further add in trade deficit number.

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