Even as the impact of the coronavirus (COVID-19) pandemic would probably linger for years to come, sub-Saharan Africa will likely reverse an economic contraction next year as countries in the region begin to ease movement restrictions, the World Bank has said.
The bank, which stated this in its latest outlook for the region released yesterday, said the pandemic has put “a decade of hardwon economic progress at risk,” adding that as many as 40 million people could be pushed into extreme poverty, erasing five years of gains fighting poverty. According to the Bretton Woods institution, Sub-Saharan Africa’s gross domestic product is on track to shrink 3.3 per cent this year, its worst performance on record, due to the combined effects of the disease and lower oil and commodities prices. Growth of about 2.1per cent could follow in 2021 and 3.2 per cent in 2022, the bank said.
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 per cent in 2021 and 2.1 per cent in 2022. By the end of 2021, the region’s real percapita GDP may have dropped to 2007 levels,” according to the report. The region will lose at least $115 million in output this year and long-term losses are expected “with the level of real per-capita GDP expected to contract by 2.1% and 5.1%,” confirming earlier forecasts that sub-Saharan Africa will suffer its first recession in a quarter of a century in 2020.
While East Africa and southern Africa are expected to experience slower growth in 2020 compared with West and Central Africa, their economies may expand faster next year at 2.7 per cent, versus 1.3 per cent in West and central Africa. Oil-exporting countries have been hit hardest, with growth expected to drop by more than 4 per cent in Angola and Nigeria. TogiveAfrica’spoorestcountries some breathing room, the World Bank and the International Monetary Fund (IMF) have proposed suspending debt servicing this year. However, thatwouldaddress only a fraction of total debt and debt relief from private creditors is likely needed, as well, the lender said.
IMF Managing Director, Kristalina Georgieva, said in a speech on Monday that the global economy is in “less dire” shape than it was in June, but risks crashing again if governments withdraw stimulus packages too soon, fail to control the coronavirus and ignore emerging market debt problems. According to the IMF boss, countries across the world risk facing massive bankruptcies and lasting economic damage if fiscal and monetary support deployed to support their economies through the coronavirus crisis.