Macro-Economic Effects of COVID-19 on the EAC Economies
Date
2021-10-08
Authors
Okumu, Ibrahim Mike
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
This paper undertook an exploratory study of the effects of COVID-19 on the
economies of the East African Community (EAC) Partner States, and the respective
policy choices undertaken by each Partner State. The rationale of the study was to
identify the areas of policy convergence in the midst of COVID-19 for purposes of
streamlining EAC regional-wide policy choice in an effort to mitigate the impact of
COVID-19. Macroeconomic indicators were selected from the financial, real, monetary,
external, and fiscal sectors. The study used secondary data collected from the World
Development Indicators, central banks of the respective Partner States, statistics
agencies of the respective Partner States, and treasury offices of the respective
Partner States. Our findings indicate that: COVID-19 resulted in a contraction of real
GDP growth and inflationary pressure, especially in the transport sector; the financial
sector remained resilient to COVID-19 although profitability tapered off; demand for
credit shrunk as economies adopted COVID-19 containment measures; international
trade was severely hampered although the trade deficit persisted; exchange rate
depreciation pressure was apparent across the EAC, revenue shortfall has persisted
through the COVID-19 life span; and EAC Partner States resorted to public debt in an
endeavour to fill the persistent revenue shortfall throughout the COVID-19 lifespan
in an effort stimulate their respective economies. Across the EAC Partner States,
expansionary fiscal and monetary policies with degrees of intensity and extensiveness
across the trading bloc were adopted in an attempt to mitigate the distortionary
impact of COVID-19. EAC Partner State with intensive and extensive monetary and
fiscal policy regimes equally adopted aggressive COVID-19 containment measures.