- The IMF has reversed its projections for Africa’s economy just months after its first prognosis. It estimates that the comic decline this year for the continent will drop by -3.2 per cent.
- The IMF Directors Abebe Aemro Selassie, explains that this projection captures the true picture of the economic impact of the pandemic in the region.
- The Director links Africa recovery to how fast the region can check the rising number of the infected.
The COVID-19 pandemic has forced the IMF to reverse its estimate its projections for Africa’s economy just months after its first prognosis.
The IMF now estimates that the economy of the Sub-Saharan Africa region will decline this year by -3.2 per cent, which is 1.6 percentage points more than it said in April.
In several countries, growth is now expected to collapse, particularly those dependent on tourism and resources, such as oil and mineral exporters. Growth is expected to come to a near standstill in more diversified, non-resource based economies.
The IMF Africa Director Abebe Aemro Selassie explains that this projection captures the realities of the economic struggle caused by the pandemic in Africa. “We realized the global economic environment was much weaker than we were expecting and that the periods of lockdowns in some African countries were even longer than we were envisaging.”
While the growth projection of Sub-Saharan Africa does not look good, a key long-term concern is how real per capita GDP in the region is expected to contract by as much as -5.4% this year. The IMF says this would put the per capita GDP 7 percentage points below last October ‘s estimated level. In reality, it could effectively wipe out nearly 10 years of progress toward poverty reduction in the region.
Growth in Sub-Saharan Africa is expected to slowly recover if the pandemic slows in the second half of 2020 with the IMF predicting a return to growth of 3.4 per cent next year — it had previously predicted growth of 4 per cent. Some of the reasons for the stalled growth of Africa than the 5.4 per cent global 2021 projection is that sub-Saharan African countries have fewer and smaller policy choices than better-developed economies. That is why Angola, Nigeria and South Africa’s largest economies won’t see real GDP growth returning to pre-crisis levels until 2023 or 2024.
The hurdle for the IMF and other economic forecasters is that it is very difficult to say the pandemic will be under control any time soon, especially in Africa, with any level of confidence.A common feature across several African countries is that the Covid-19 case numbers have accelerated even as they’ve eased lockdowns. In Africa, the figures are still fairly low — less on a “per million” basis than in Europe and Latin America, but higher than in Asia.
While the economic crisis in Africa is often said to be worse than the pandemic health crisis, the IMF Director calls it a false dichotomy. “If you don’t have the disease under control you’re not going to have an economic recovery, it’s not going to be durable.”