The Sub-Saharan Africa region will see economic growth reverse and plunge to between -2.1% to as low as -5.1% this year due to the Covid-19 global crisis. The region will fall into its first recession for 25 years, compared with 2.4% growth last year, according to the World Bank’s Africa’s Pulse, its twice-yearly economic update for the region
Gross domestic product in the region will probably contract 2.1%-5.1% in 2020, the Washington-based lender said in an emailed copy of its Africa Pulse report on Thursday. Growth was 2.4% in 2019.
“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,” Hafez Ghanem, World Bank Vice President for Africa, said in a statement accompanying the report.
The growth downgrade is based on risks including a sharp decline in output in key trading partners, such as China and the euro area, falling commodity prices, reduced tourism, and measures taken to contain the virus, the World Bank said. It estimates the virus outbreak will cost Sub-Saharan Africa between $37 billion and $79 billion in output losses due to disruption to trade and value chains, reduced foreign investment and aid.
The pandemic is also hitting the region’s three biggest economies — Nigeria, South Africa and Angola which had already all been struggling with weak growth and investment as well declining oil and industrial metals prices (oil is down 50%, metals down 11% between December and March). Growth is set to fall up to 7 percentage points for oil exporters and by 8 percentage points for metals exporters, when compared with the World Bank’s no-Covid base case.
“We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments,” Ghanem said.
World Bank is deploying up to $160 billion in financial support for developing countries over the next 15 months to help protect the poor and support businesses. On Wednesday the African Development Bank said it will be provide up to $10 billion to African governments and the private sector under a new Covid-19 Response Facility.