Driven by the economic fallout of Covid-19, growth in sub-Saharan Africa (SSA) is predicted to fall to -3.3% this year, pushing the region into its first recession in 25 years, according to the World Bank’s latest regional economic analysis ‘Africa’s Pulse: Charting the Road to Recovery’.
The pandemic could also drive up to 40 million people into extreme poverty in Africa this year, erasing at least five years of progress in fighting poverty.
With over a million reported Covid cases across the continent, the pandemic is still not under control in the region.
Nigeria’s real GDP contracted by 6.1% year-on-year in the second quarter - the worst result in more than a decade. South Africa, operating under severe containment measures, saw its real GDP contract by 17.1% year-on-year in the second quarter. Angola, sub-Saharan Africa’s second largest oil producer after Nigeria, saw its economy contract by 1.8% year-on-year during this period.
The decline in growth has been stronger among metals exporters where real GDP is expected to contract by 6%, partly reflecting the large drop in output in South Africa. Among oil exporters, after expanding by 1.5% in 2019, real GDP is projected to fall by more than 4% in 2020, owing to contractions in Angola and Nigeria.
In contrast, for non-resource-intensive countries the decline in growth is expected to be moderate, on average. In Côte d’Ivoire, Ethiopia, and Kenya growth is expected to slow substantially, but remain positive, owing to their more diversified economies. Meanwhile, the tourism-dependent economies, especially those of Cabo Verde, Mauritius and the Seychelles, experienced a sharp contraction as exceptionally weak international tourism severely impacted the service sector.
The substantial downturn in economic activity will cost the region at least $115 million in output losses this year. Gross domestic product per capita growth is expected to contract by nearly 6.0%, in part caused by lower domestic consumption and investment brought on by containment measures to slow the spread of the coronavirus.
The report 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% of African firms have accelerated the use of digital technology and increased investments in digital solutions.