This year, economies in Sub-Saharan Africa might go into a collective recession and loose between USD 37 Bn to USD 79 Bn in the process.
According to fresh data from the World Bank’s Africa Pulse, the advent of upsurge of the coronavirus pandemic will significantly hamper the growth of the region.
The report forecasts that Sub-Saharan Africa may fall from its 2.4 percent growth in 2019 to 2.1 percent in 2020. Should this happen, the region’s countries will experience its first recession in the last 25 years.
For the records, Africa has at least 10,956 confirmed cases of COVID-19, 562 deaths and 1,149 recoveries according to a tally based on government statements and WHO data.
WB’s analysis shows that the epidemic’s combined effects will disrupt value chains, in turn impacting commodity exporters and countries with strong participation.
COVID-19 will also reduce foreign financial flows from remittances, tourism, foreign direct investments, foreign aid and capital flight. These findings are in semblance to that of McKinsey which points to an unfolding health and economic crisis that demands bold action.
Africa Pulse also projects that Nigeria, Angola and South Africa’s real gross domestic product will fall sharply due to the persistently weak growth and investment. It’s no coincidence that trio are some of the region’s largest economies and oil-exporting countries.
The COVID-19 crisis also has the potential to spark a food security crisis in Africa. The report says agricultural is production potentially contracting between 2.6 percent in an optimistic scenario and up to 7 percent if there are trade blockages.
“Food imports would decline substantially (as much as 25 percent or as little as 13 percent) due to a combination of higher transaction costs and reduced domestic demand,” it says.
The coronavirus pandemic and its effects form a beehive of problems African economies are not currently prepared to tackle. Some of the region’s economies are fragile, choked with debt and politically unstable.
Featured Image: WEF