The Global Economy is expected to contract at a rate of between 4.9 and 5.2 percent in 2020 with countries worst hit by the pandemic leading the recession.
The developed economies are projected to decline by between 7.0 and 8.0 percent while the less developed market are projected to decline by between 2.0 and 3.0 percent.
The worst-hit sector is the services sector with the global PMI index coming in at 51.9, a decline from the 52.2 reading recorded in 2019.
According to a report compiled by Cytonn Investments, economies around the world are facing continued worsening of the pandemic in some economies despite leveling in others, leading to even larger disruptions in business activity than expected.
There is a huge and continued decline in consumption and services as people have had to rely on their savings as they adhere to social distancing and movement restrictions set in place to reduce the Virus spread.
Economies are still experiencing depressed mobility as travel is impacted, a contraction in global trade, and lower Inflation due to subdued demand in most economies coupled with the current low oil prices.
Global commodity prices improved in Q3’2020 led by precious metals as investors sought them as the key store of value during these uncertain times.
Below is a summary performance of various commodities:
According to the World Bank, the African regional growth is expected to contract by 2.8 percent in 2020 and rebound by 3.1 percent in 2021.
The region has been more resilient with much fewer COVID-19 related deaths compared to the other regions.
All select currencies depreciated against the US Dollar in Q3’2020 with the Zambian Kwacha being the worst performer, depreciating by 42.2 percent against the dollar YTD.
The depreciation recorded by the currencies is partly attributable to the ongoing COVID-19 pandemic, which has seen a fast-falling demand for export commodities given the lockdown measures put in place.
The performance of the Zambian Kwacha can be attributable to the low economic productivity given the fall of copper prices as well as high demand for hard currency from the government as it seeks to meet its debt repayment obligations.
The Kenya Shilling depreciated by 7.1 percent in Q3’2020 to close at 108.4 shillings against the US Dollar.
Below is a table showing the performance of select African currencies: