Coronavirus: Africa May Fall To 1st recession in 25 years Says World Bank

  • Real growth in gross domestic product is expected to fall sharply, particularly in the three largest economies in the region – Nigeria, Angola and South Africa
  • Africa has at least 11,400 confirmed cases of the novel coronavirus, 574 deaths and 1,405 recoveries
  • Oil-exporting countries would also be hit hard; while growth is likely to weaken significantly in the West African Economic and Monetary Union and the East African Community due to weak external demand, disruptions in supply chains and production.

The World Bank has forecasted that sub-Saharan Africa could slip into its first recession in 25 years because of the coronavirus pandemic.

So far, Africa has at least 11,400 confirmed cases of the novel coronavirus, 574 deaths and 1,405 recoveries. This pandemic has forced various African governments to announce a total lockdown or curfews in response to the virus, thereby grounding all international planes as well.

The World Bank and International Monetary Fund are now racing to provide emergency funds to African countries to combat the virus after the bank’s Africa’s Pulse reported that sub-Saharan Africa’s economy will contract 2.1 per cent to 5.1 per cent from a growth of 2.4 per cent 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.

World Bank Vice President for Africa Hafez Ghanem

“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.

Real growth in gross domestic product is expected to fall sharply, particularly in the three largest economies in the region – Nigeria, Angola and South Africa, the World Bank said.

READ ALSO: COVID-19 Crisis: The Thriving & Dying Businesses In Nigeria

Oil-exporting countries would also be hit hard; while growth is likely to weaken significantly in the West African Economic and Monetary Union and the East African Community due to weak external demand, disruptions in supply chains and production.

The bank said the spread of the flu-like respiratory disease also had the potential to lead to a food security crisis on the continent, with agricultural production forecast to contract 2.6 per cent and up to 7 per cent in the event of trade blockages.

“Food imports would decline substantially (as much as 25 per cent or as little as 13 per cent) 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.

The World Bank said African policymakers should focus on saving lives and protecting livelihoods by spending money to strengthen health systems and taking quick actions to minimise disruptions in food supply chains.

It also recommended social protection programmes, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector.

 

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