Sub-Saharan Africa to chop 1.6pc from GDP due to corona
Sub-Saharan African economies are projected to contract by 1.6 per cent in 2020 due to blanket lockdowns, curfews and closures imposed by governments to brake the coronavirus juggernaut, the International Monetary Fund (IMF) said yesterday.
The GDP of the continent’s economic superpowers, Nigeria and South Africa, is expected to shrink by 3.4 and 5.8 per cent respectively as a result of the pandemic, which has crushed global demand and caused commodity prices to plummet.
“The health crisis is having a severe impact on economic activity,” said the IMF in a world economic outlook released yesterday.
It projected the global economy would contract by three per cent this year – worse than during the 2008/09 financial crisis.
“Among emerging market and developing economies, all countries face a health crisis... which will have a severe impact on economic activity in commodity exporters,” said the report.
Grim prediction
The bleak figures were released following a grim prediction by the World Bank, which warned last week that sub-Saharan Africa could slip into its first recession in 25 years because of coronavirus.
Africa continues to lag behind the global curve for coronavirus infections and deaths.
To date, the world’s poorest continent has recorded nearly 15,500 cases of the respiratory disease and almost 850 fatalities, according to an AFP tally which includes North Africa.
Many African governments used precious time to close borders and impose stay-at-home laws to stem the disease when just a handful of cases had been confirmed.
“Even in countries not experiencing widespread detected outbreaks... the significant downward revision to the 2020 growth projection reflects large anticipated domestic disruptions to economic activity from Covid-19,” the IMF said.
Africa’s larger economies will be disproportionately affected.
Oil giants
South Africa had already slipped into recession in the final quarter of 2019 and recently saw its credit ratings cut to junk status.
In Kenya, the Central Bank is projecting a growth of 3.4 per cent this year, while the Treasury expects it to hit three per cent.
Oil giants Angola and Nigeria saw their revenues tumble with the global fall in oil prices, as air travel has almost ground to a halt due to the pandemic.
The IMF said fiscal measures provided the keys to easing the slump and helping businesses recover once shutdowns are lifted.
It called on “external support” for countries “facing financing constraints to combat the pandemic”.
South Africa’s central bank also predicted yesterday that the economy would shrink by 6.1 per cent in 2020 as it cut its main interest rate by a full percentage point.
“Fiscal stimulus can preempt a steeper decline in confidence, lift aggregate demand and avert an even deeper downturn,” said the Fund.
“But it would most likely be more effective once the outbreak fades and people are able to move more freely.”
The IMF has approved immediate debt service relief for 19 African countries for an initial period of six months to enable them to channel financial resources towards dealing with the coronavirus pandemic.
Burkina Faso, Chad, Central African Republic and Mozambique are among the countries that will benefit from this relief. – AFP and BBC
