Economists downplay locust invasion impact
What you need to know:
- The economy may miss its 2020 growth, projected by the National Treasury at 6.1 percent, by a negligible 0.2 percent in the worst-case scenario.
- This assessment contradicts that of National Treasury which has classified the invasion by desert locusts as one of the systemic risks to the economy this year.
- Treasury Cabinet Secretary Ukur Yatani has warned that the invasion by the migratory pests, the worst in 70 years, could significantly cut agricultural production leading to higher inflation and slowed economic activities.
Economists have played down the invasion of farmlands by desert locusts, saying it poses minimal impact on growth.
The economy may miss its 2020 growth, projected by the National Treasury at 6.1 percent, by a negligible 0.2 percent in the worst case scenario, London-headquartered Capital Economics says.
“If output in the already affected 14 counties falls by the 3.5 percent (maximum observed in previous outbreaks in Madagascar, Mauritania and Mali) this would cut 0.2 percentage points off headline GDP growth,” Virág Fórizs, the firm’s economist for Africa and Middle East, wrote in a Friday note.
“And if adjacent counties also suffer a similar fall in agricultural output, the total economic cost would double to 0.4 percentage points of GDP. Even under this scenario, the key agricultural crop producing areas in the southwest would be spared.”
This assessment contradicts that of National Treasury which has classified the invasion by desert locusts as one of the systemic risks to the economy this year.
Treasury Cabinet Secretary Ukur Yatani has warned that the invasion by the migratory pests, the worst in 70 years, could significantly cut agricultural production leading to higher inflation and slowed economic activities.
Some of the counties where the locusts have been sighted include Meru, Murang’a, Machakos, Laikipia, Isiolo, Samburu, Marsabit, Mandera, Wajir, Baringo and Garissa. Agriculture Secretary Peter Munya says it will take up to six months to put the voracious insects under control.
“Locust outbreaks can inflict significant economic damage by destroying crops and disrupting the income and food security of rural populations,” Ms Fórizs said.
“The scale of the effect depends on a wide variety of factors (including harvest schedules and weather conditions).”
UN’s Food & Agriculture Organisation (FAO) warned Tuesday last week that the threat may escalate as eggs laid by swarms begin to hatch in the coming months.
“Even in a worst-case scenario, if output fell in every county, the hit to headline growth would only be about 0.8 percentage points of GDP,” Ms Fórizs added.
