Covid-19 constrains Sadc economy

The novel Coronavirus (Covid-19) pandemic has constrained Southern African Development Community (Sadc) economies resulting in an uncertain business landscape across the region and the world.

The regional bloc said this in its latest monthly report for April, which assessed the impact of Covid-19 on member countries. As the pandemic-induced pressure mounts, industries are moving swiftly to build resilience, while governments are mobilising to safeguard citizens and manage the social and economic fallout, said the bloc.

In view of these factors, combines with the on-going lockdowns around the globe, Sadc said the trading platform was slowly being skewed with some players losing while others winning.

It said sectors that have been severely impacted by Covid-19 include the tourism and leisure, aviation and maritime, automotive, construction and real estate, manufacturing, finance services, education and the oil industry.

On a positive note, despite strong global misconceptions about the transmission of Covid-19 pandemic, it said the global functioning of the food processing and retail business have remained stable.

“The food processing and retail business largely benefited from the recent announcement by WHO (World Health Organisation) and World Food Organisation that, it is highly unlikely that people can contract Covid-19 from food or food packaging.

“As such, companies in food processing and retail have witnessed a rise in demand,” said Sadc.

However, it said this demand was only in the short run and has the potential to fuel inflation.

“The global lockdown has also presented opportunities in the Information Communication Technology (ICT)industry. Many companies have benefited from the pandemic, in particular, Zoom video communications has seen a surge in online meetings, while Netflix has seen a rise in home streaming during the lockdown.

“There is also a surge in using Skype for communicating and meetings. Chat app Slack has also seen a surge in users, while workplace chat platform Microsoft Teams saw daily active users rocketing to 2,7 billion meeting minutes in April 2020, a 200 percent surge from 900 million recorded in March 2020,” it said.

Sadc noted that while these platforms were crucial in the transition to digital economy and during Covid-19, security is not guaranteed.

The regional bloc also noted that e-commerce platform has also experienced a surge in users.

“Experts have established that the likelihood of contaminating during shipping commercial goods is low and the risk of catching the virus that causes Covid-19 from a package that has been moved, travelled and exposed to different conditions and temperatures is also low.

“There are also notable behavioural changes around the way people are buying groceries,” Sadc said.

The benefits associated with Covid-19 to the ICT industry maybe short-lived as the auxiliary industries are weighed down by the pandemic.

“The negatively impacted industries that include tourism, aviation and sport have seen a dip in visits volumes and business on websites for airlines, travel agents, hotels and tourist destinations,” said the bloc.

Additionally, it said uncertainty has changed consumer spending behaviours and patterns towards essential products and services, which can adversely affect the business and revenues for e-commerce industry that include Amazon, Alibaba, Walmart, JD.com and Rakuten in the long run.

The adverse impact of the changing consumer spending behaviour can be depicted by the month on month decline in retail sales of 8,4 percent in March 2020.

On the other hand, the Covid-19, which has disrupted operations of companies is likely to squeeze the advertisement revenues for the media and entertainment industry as companies reprioritise expenditures to preserve resources in the face of uncertainty.-herald.co.zw

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