The Coronavirus is considered to be one of the major shocks affecting the global economy and could have consequences on the domestic economy, economists have warned.
Globally, economists predict that some of the pinch could be felt in the growth of the aviation industry and tourism as well as access to markets.
For Rwanda, economists say, some of the impact could be felt in sourcing of products and goods used for the local market.
National Bank of Rwanda Governor John Rwangombwa said that an estimated 20 per cent of Rwanda’s imports are sourced from China.
The imports are largely made up of consumer goods, capital goods, intermediate goods from a number of big infrastructure projects as well as the growth of manufacturing subsector.
Capitals goods are those that are used in producing other goods while intermediate goods are goods, such as partly finished goods, used as inputs in the production of other goods including final goods.
With a significant portion of them sourced from China, a consequence to the Rwandan economy would be shortage of goods in the local market.
These could also affect the progress on some projects where capital goods are involved as well as development of industries where raw materials are sourced from China.
Central Bank Chief Economist Prof. Thomas Kigabo said that with the virus set to have an impact on the global economy, Rwanda as an open economy is not immune to the shocks.
He, however, said that it was too early to determine the magnitude and scale of the potential impact.
Like other shocks, he said, the Central Bank is ready to make interventions such as easing pressure in the currency markets as well as adjusting the monetary policy stance to contain potential inflationary pressures.
However, some economists have proposed the search for alternative sources of goods and imports to ensure that the local economy is not affected adversely.
BK Group Chief Executive Officer Diane Karusisi said that there is need to support the local private sector involved in imports of goods to seek alternative sources of goods to ensure that that the trade sector is not adversely affected.
This comes at a time when the trade sector is leading among industries with the highest Non-Performing Loans (NPLs) ratio. The sector has about 35.4 per cent of all non-performing loans.
Traders interviewed by The New Times said that among the consequences of the virus on their operations include shortage of commodities when their stocks get depleted.
They said that while they are expecting stock that is on transit that had previously been ordered, they have no guarantee that they can access more goods in the near future.
The traders say that, often, they have to travel to China to order goods they import.
Others said that they are currently looking at the possibilities of sourcing from Dubai, UAE which they said will, however, come with higher cost of doing business and consequently more expensive goods.Follow https://twitter.com/ByCollinsMwai