In its October Regional Economic Outlook for Sub-Saharan Africa, the International Monetary Fund (IMF) has maintained that their growth expectation this year is broadly unchanged from June. Abebe Aemro Selassie, Director, African Department, IMF said during the press briefing of the Outlook launch that they expect economic activity for Sub-Saharan Africa to contract by three percent, this year.
“No country has remained untouched by the crisis. The largest impact on growth, this year, will be on tourism dependent economies, but oil exporting countries in the region, other commodity intensive countries have also been hit hard, and growth, even in the more diversified economies, will also be significantly impacted this year” he emphasised.
The Director went further to give an update on how the COVID-19 crisis is impacting the region, the economic outlook, and the policy challenges that they see for the coming months.
On the health side, the onset of the pandemic he said was delayed in Sub-Saharan Africa, and infection rates have been relatively low, compared to other parts of the world, but limited testing could be masking the true scale of the pandemic, and, like many others, and their view is that there is absolutely no scope for complacency in dealing with this pandemic. For one, the overall low numbers mask quite a bit of variation in how the pandemic is unfolding in the region.
On the economic front, as they’ve been reporting for the last several months, the pandemic really has been quite devastating to the region. In just a few months, the crisis has jeopardized years of hard-won development gains and upended the lives and livelihoods of millions of people in the region.
According to him, regional activity dropped abruptly and quite sharply in the second quarter. “In more recent days, weeks, we’ve seen a cautious reopening of economies and more of a forward-looking policy posture to ignite growth, and, with the loosening of containment measures, somewhat higher commodity prices, and the easing of financial conditions, there are tentative signs of a recovery in the second half of 2020.”
For 2021, the Fund he said do expect recovery, albeit modest, with growth accelerating to about 3.1 percent, and, beyond that, they expect the recovery to be quite gradual and fairly uneven.
The entire region he pointed out is not expected to return to its 2019 level of output until 2022, and for some of the region’s largest economies, real GDP will not come back to the pre-crisis level until 2023 or 2024. This growth he said will translate into quite significant decline in standard of living, as measured by real per capita GDP, over 2020-21, a contraction of around five percent, which is significantly larger than most other parts of the world.
By Zainab Iyamide Joaque