Covid-19 Affects the Economy

The coronavirus pandemic has hit the global economy like never before, thus, affecting individual economies, including Kenya. Even though China was the first to be hit, considering that Wuhan, the virus’s origin, is a financial hub for China, the social and economic impacts will negatively affect the globe. Notably, tourism, commerce, and trade are significant aspects of an economy that have been affected by the pandemic, in China, and around the globe. This implies that businesses will perform poorly, some even shutting down and creating unemployment. In response to the economic and social effects of the pandemic, governments will have to increase their spending alongside reductions in revenue generation.

For instance, Kenya has outlined some measures aiming at minimizing the economic effects of Covid-19. In a bid to stabilize the Kenyan economy, the government has sort to major government earners salaries. The strategy through which these funds will meet the desired goals is tax deferrals and businesses’ liquidity needs.

Overview of Measures Relevant to the Kenyan Government

 The economic hardships caused by the Coronavirus pandemic makes liquidity an issue of essence in Kenya. Tax deferrals significantly apply in this case, considering that some incomes might be reduced to zero. They are aimed at enabling Kenyans experience flexibility in their payments and enhancing the liquidity of businesses (Slaughter, 2020). The impact on the economy can be assessed through the GDP, but will depend on the duration that the pandemic will last. Notably, various countries such as Italy have considered lockdowns as means to prevent its further spread.

In Kenya, various sectors that contribute to the country’s GDP, have closed down operations, in a bid to prevent crowding. Social-distancing is the term used in Kenya and globally to inform on the importance of avoiding crowded places. Various analysis has been made and the economic impacts of the Covid-19 in different scenarios. In the event that there is a shutdown for one and a half months, Kenya’s GDP is likely to decline by 2.9 percent. The negative impacts on the GDP will depend on the duration of the pandemic. Unarguably, the more it lasts, the worse the economic effects.

Currently, international travel is restricted or limited globally. While this may not seem entirely possible, other measures are in place to limit the spread of Covid-19 across borders. For instance, the Kenyan government has established border measures that will provide information on whether an incoming traveler is from a high-risk country. Travelers arriving into the country are screened to determine their health and to protect residents. The government also places some responsibility on Kenya’s residents to assess their health and seek help if they have health concerns relating to the pandemic.

Notably, treatment research is one of the top priorities in Kenya, and the government seeks to set aside approximately 115 billion shillings for that purpose. Kenya is also working closely with the United States, Germany, France, Italy, the United Kingdom, and Japan, to find political solutions to the pandemic. Even though Kenya is working closely with these governments, it misses out on some critical policies that could facilitate its fight against the pandemic.

Policy Recommendations

Kenya could follow the footsteps of China in a bid to control further spreading of the disease because it could limit possible long-term effects. This involves banning unnecessary travel in and out of the country, even though it could affect the tourism sector.  Although Kenya has not yet instilled an emergency lockdown, it is likely to go in that direction. This is considering that it has been quite helpful in countries like France and Italy. It is noteworthy that regardless of the significant productivity of some provinces in China, lockdowns were instituted. Thus, the Kenyan government officials should not be thinking twice on the issue of emergency lockdowns.

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