Macro-Economic Effects of COVID-19 on the EAC Economies - Working Paper
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.