‘Sub-Saharan Africa GDP to rebound’

09 Oct, 2020 - 00:10 0 Views
‘Sub-Saharan Africa GDP to rebound’ Sub- Sahara Africa to fall into recession for the first time in 25 years

eBusiness Weekly

Sub-Saharan Africa will probably reverse an economic contraction next year as countries in the region begin to ease movement restrictions, even as the impact of the coronavirus will endure for years to come, according to the World Bank.

The pandemic has put “a decade of hard-won economic progress at risk,” the Washington-based lender said on Thursday in its outlook for the region.

Sub-Saharan Africa’s Gross Domestic Product is on track to shrink 3,3 percent this year, its worst performance on record, due to the combined effects of the disease and lower oil and commodities prices.

Growth of about 2,1 percent could follow in 2021 and 3,2 percent in 2022, the bank said.

Still, the fallout of the pandemic remains hard to predict.

The lender’s baseline scenario assumes that the number of new infections will continue to slow and that fresh outbreaks won’t result in new lockdowns. If the outbreak is more prolonged or if there’s a second wave, sub-Saharan Africa’s economy may expand by only 1,2 percent in 2021 and 2,1 percent in 2022. By the end of 2021, the region’s real per-capita GDP may have regressed to 2007 levels, according to the report.

That’s likely to lead to long-term output losses “with the level of real per-capita GDP expected to contract by 2,1 percent and 5,1 percent,” confirming earlier forecasts that sub-Saharan Africa will suffer its first recession in a quarter of a century in 2020.

“Although the pandemic is not over and the persistence and spread of the virus is uncertain, African governments have started putting in place policies and programs to support an inclusive and sustainable post-pandemic recovery,” said Hafez Ghanem, World Bank Vice President for Eastern and Southern Africa.

“Countries are putting in place policies and programs that help create jobs and accelerate economic transformation to reduce the economic impact of the pandemic now, and build the capabilities needed to ensure inclusive economic growth in the future.”

Africa’s Pulse notes that the road to recovery will also require massive investments across countries, as well as financial support from the international community, and recommends a bold reform agenda that includes policies that create fiscal space, along with policies to speed up job creation.

Several countries, including South Africa, Nigeria, and Ethiopia, have already begun implementing long-needed reforms in energy and telecommunications spurred by the current crisis, and 25 percent of African firms have accelerated the use of digital technology and increased investments in digital solutions.

By mid-September, 46 countries in Sub-Saharan Africa had put in place 166 social protection measures – with social assistance representing 84 percent of these measures.

Social protection programs have proven to be a critical tool to mitigate the social impact of the pandemic.

“As Covid-19 continues to put substantial pressure on Western and Central African economies, it is important for policymakers to create the infrastructure necessary for rapid recovery,” said Ousmane Diagana, World Bank Vice President for Western and Central Africa.

“Strong policies create the critical cornerstone for sustained, inclusive recovery and improved resilience to shocks.”

While East Africa and southern Africa are expected to experience slower growth in 2020 compared to West and central Africa, their economies may expand faster next year at 2,7 percent, versus 1,3 percent in West and central Africa. Nigeria’s real GDP contracted by 6,1 percent year-on-year in the second quarter of 2020 – the worst result in more than a decade. South Africa, operating under severe containment measures, saw its real GDP contract by 17,1 percent year-on-year in the second quarter of 2020. Angola, Sub-Saharan Africa’s second largest oil producer after Nigeria, saw its economy contract by 1,8 percent year-on-year in the first quarter of 2020.

Highly dependent on commodity revenues or tourism such as Zimbabwe experienced a decline in growth that exceeded 10 percentage points.  — Bloomberg.

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