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Business

World Bank predicts rebound of Sub-Saharan Africa’s economy next year

The World Bank said that the pandemic has put a decade of hard-won economic progress at risk.

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World Bank picks holes in CBN’s policies on lending, MSMEs loans,Covid-19: World discloses when sub-Saharan will fall into recession, World Bank predicts rebound of Sub-Saharan Africa’s economy next year, World Bank warns Nigeria, others in Africa not to relax.

The World Bank has said that the Sub-Saharan Africa (SSA) region is expected to experience a reversal of economic contraction next year as countries in the region start to ease movement restrictions, even as the impact of the coronavirus will endure for years to come.

This was disclosed by the Bretton Wood institution on Thursday, October 7, 2020, in its outlook report for the region that has been devastated by the coronavirus pandemic.

The World Bank said that the pandemic has put a decade of hard-won economic progress at risk, with the probability of as many as 40 million people being pushed into extreme poverty, erasing 5 years of gains in fighting poverty.

Sub-Saharan Africa’s gross domestic product is on track to shrink 3.3% this year, its worst performance on record, due to the combined effects of the coronavirus pandemic and lower oil and commodities prices. However, the bank said that a growth of about 2.1% could follow in 2021 and 3.2% in 2022.

Still, the fallout of the pandemic remains hard to predict.

(READ MORE:World Bank puts pressure on Nigeria for more forex reforms to aid recovery)

The lender’s prediction is with the assumption that the number of new infections will continue to decline and that fresh outbreaks won’t result in new lockdowns. If the pandemic outbreak is more prolonged or if there’s a second wave, sub-Saharan Africa’s economy may expand by only 1.2% in 2021 and 2.1% in 2022.

The report also suggests that by the end of 2021, the region’s real per-capita GDP may have regressed to 2007 levels.

The region will lose at least $115 million in output this year and long-term losses are expected, with the level of real per-capita GDP expected to contract by 2.1% and 5.1%, confirming earlier forecasts that sub-Saharan Africa will suffer its first recession in a quarter of a century in 2020.

While East Africa and southern Africa are expected to experience slower growth in 2020 compared with West and Central Africa, their economies may expand faster next year at 2.7%, versus 1.3% in West and Central Africa. Oil-exporting countries have been hit the hardest, with growth expected to drop by more than 4% in Angola and Nigeria.

The World Bank and the International Monetary Fund have been pushing for debt relief for some of the poorest countries, especially in Africa, to help mitigate the impact of the pandemic on their economy. These reliefs include debt cancellation or suspension of debt servicing this year. However, the World Bank said that would address only a fraction of total debt, and debt relief from private creditors is likely needed as well.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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