Sub-Saharan Africa to fall into recession this year, says World Bank

The rapidly spreading Covid-19 coronavirus outbreak is expected to push sub-Saharan Africa into recession for the first time in 25 years, the World Bank said in a new forecast on Thursday.

The bank’s Africa’s Pulse report said the region’s economy will contract 2.1% to 5.1% from growth of 2.4% last year, and that Covid-19 will cost sub-Saharan Africa $37 billion to $79 billion (R1.4 trillion) in output losses this year due to trade and value chain disruptions, among other factors.

Africa has at least 10 956 confirmed cases of the novel coronavirus, 562 deaths and 1 149 recoveries, according to a Reuters tally based on government statements and World Health Organisation (WHO) data.

World Bank vice-president for Africa, Hafez Ghanem, said: “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.”

The World Bank and the International Monetary Fund are racing to provide emergency funds to African countries and others to combat the virus and mitigate the impact of sweeping shutdowns aimed at curbing its spread.

Covid-19 has led to the suspension of international passenger travel in many countries on the continent, and has hit sectors such as tourism hard.

Various African governments have announced lockdowns or curfews in response to the virus, which was slow to reach many African countries, but is now growing exponentially, according to the WHO.

Real GDP growth was projected to fall sharply, particularly in the region’s three largest economies – Nigeria, Angola and South Africa, the World Bank said.

Countries that export oil would also be hit hard, while growth would most likely weaken substantially in the West African Economic and Monetary Union, and the East African Community due to weak external demand, disruptions to supply chains and domestic production.

The bank said the spread of the respiratory virus could also lead to a food security crisis on the continent, with agricultural production forecast to contract 2.6% – and even up to 7% – in the event of trade blockages.

“Food imports would decline substantially (as much as 25% or as little as 13%) 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 US 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.

Cesar Calderon, the bank’s lead economist and lead author of the report, said: “There will be a 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.”

The World Bank said African policymakers should focus on saving lives and protecting livelihoods by spending money to strengthen health systems and taking quick action 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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