The World Bank has forecasted that sub-Saharan Africa will be pushed into recession in 2020 with Gross Domestic Product (GDP) contracting by up to 5.1 percent due to the ravaging COVID-19 outbreak. The bank also predicted a sharp drop in the GDP of Nigeria, Angola, and South Africa, the region’s three largest economies.
The Africa’s Pulse report released by the bank yesterday, said the region’s economy will contract by 2.1 percent to 5.1 percent from growth of 2.4 percent last year, and that the coronavirus will cost sub-Saharan Africa $37 billion to $79 billion in output losses this year due to trade and value chain disruption, among other factors. It noted that this will be the first regional recession in 25 years.
“The COVID-19 pandemic is testing the limits of societies and economies across the world and African countries are likely to be hit particularly hard,” World Bank Vice President for Africa, Hafez Ghanem said. The World Bank and International Monetary Fund (IMF) are racing to provide emergency funds to African countries and others to combat the virus and mitigate the impact of sweeping shutdowns aiming at curbing its spread. The coronavirus has led to suspension of international passenger travel in many countries on the continent and thus affected sectors such as tourism. According to the bank, real gross domestic product growth is projected to fall sharply particularly in the region’s three largest economies – Nigeria, Angola, and South Africa. Oil exporting-countries would also be hard-hit; while growth would likely weaken substantially in the West African Economic and Monetary Union, and the East African Community due to weak external demand, disruptions to supply chains and domestic production. The bank said the spread of the disease also had potential to lead to a food security crisis on the continent, with agricultural production forecast to contract 2.6 percent and up to seven percent in the event of 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,” the bank said in a statement accompanying the report. The institutions have also called on China, the United States and other bilateral creditors to temporarily suspend debt payments by the poorest countries so they can use the money to halt the spread of the disease and mitigate its financial impact. “There will be need for some sort of debt relief from bilateral creditors to secure the resources urgently needed to fight COVID-19 and to help manage or maintain macroeconomic stability in the region,” Cesar Calderon, the bank’s lead economist and lead author of the report said.