September 20, 2020
Clickongh

Sub-Saharan Africa’s economy to shrink by 3.2% in 2020 – IMF

Data released by the International Monetary Fund, IMF, in a revised Regional Economic Outlook (REO) forecast for 2020 indicates that countries within Sub Saharan Africa will suffer a significant shrink due to depressed economic activity, a negative outcome of the novel Coronavirus pandemic.

According to the IMF, earlier anticipated impact could worsen in Sub Saharan Africa as the regional economy is projected to contract by 3.2 percent in 2020, which is 1.6 percentage points deeper than projected in April, 2020.

A statement issued by the IMF explains that the deepening recession also mirrors a weaker external outlook as global growth is also projected at –4.9 percent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast.

“The outlook for 2020–21 is considerably worse than expected in April and subject to much uncertainty. It reflects a weaker external environment and measures to contain the COVID-19 outbreak, which has been accelerating in the past few weeks in several sub-Saharan African countries. Economic activity this year is now projected to contract by some 3.2 percent, markedly worse than the 1.6 percent contraction anticipated in April,” the statement noted.

It however stated that growth in the region is projected to recover only gradually assuming that the pandemic wanes, and lockdowns ease further in the second half of 2020.

“Growth is projected to recover to 3.4 percent in 2021 subject to the continued gradual easing of restrictions that has started in recent weeks and, importantly, if the region avoids the same epidemic dynamics that have played out elsewhere” the statement stated.

Reaching the continent through travelers returning from hotspots in Asia, Europe and the United States, Africa’s first COVID-19 case was recorded in Egypt on 14 February, 2020.

By March 15, 2020, the region recorded its 100th case,

The increasing spread of the virus prompted many governments to introduce unprecedented measures to contain the epidemic.

The novel Coronavirus induced measures reduced agricultural productivity, led to many businesses being shut down temporarily and widespread restrictions on travel and mobility.

It also weakened supply chains, increased trade tensions, limited job prospects, and exacerbated political and regulatory uncertainty.

Despite these bold measures, the number of cases reached a quarter million, of which over 60 percent were detected in Ghana, Nigeria, and South Africa.

However, though many countries have started easing restrictions, the IMF further explains that “The easing of containment measures could lead to an even quicker acceleration in infections, with potentially devastating effects on health systems and the population. Even if sub-Saharan African countries avoid new lockdowns, slower global growth could weigh on activity through trade and financial links, and financial market dislocations could add to the stress. Moreover, a persistent slowdown in international tourism could weigh on the recovery in services-dependent economies.”

The statement further noted that growth is expected to also fall the most in tourism-dependent and resource-intensive countries such as Comoros and Mauritius.

“Oil exporting countries saw their growth revised down by 2 percentage points on average and other commodity exporters’ by 1½ percentage points. Growth in non-resource intensive countries is expected to come to a near standstill. All but two countries are set to experience falls in real per capita income, ranging between 0.1 and 15 percent. On average, per capita incomes across the region will fall by 7 percent relative to expected levels back in October 2019 and close to levels seen nearly a decade ago,” the statement added.

It however cautioned regional policies to remain focused on safeguarding public health, supporting people and businesses hardest hit by the crisis, and facilitating the recovery for a quick rebound in 2021.

Source: Business