Africa’s growth is expected to rebound partially next year from a pandemic-induced economic slump, but it could still lose nearly a quarter of a trillion dollars in economic output in 2020 and 2021, the African Development Bank (AfDB) said on Tuesday.
The continent’s hardest-hit nation of the virus, South Africa, has recorded roughly 200,000 cases of COVID-19 and just over 3,100 deaths.
African economies, however, have not been immune to the pandemic’s shockwaves, with oil exporters such as Algeria, Angola, Libya and Nigeria on track to witness the continent’s sharpest declines in economic output.
Under a scenario in which the pandemic continues into the second half of this year, the AfDB forecasts a 3.4% contraction in gross domestic product in 2020 – compared to a pre-pandemic projection by the Abidjan-based bank of growth of 3.9%.
The figures were included in a revision of the AfDB’s African Economic Outlook, which was originally published before the pandemic.
A partial V-shaped recovery should see growth rebound to between 2.4 and 3% next year, the bank said.
“But the projected recovery in 2021 would not make up for an estimated cumulative loss to Africa’s GDP of $173.1–$236.7 billion for 2020 and 2021 due to the pandemic,” the report said.
Low commodities prices
A rebound is threatened by various risks, including a potentially worsening pandemic, subdued commodity prices, volatile global financial conditions and even natural disasters such as the locust infestations which have ravaged East Africa this year.
The International Monetary Fund slashed its 2020 global output forecast last month, projecting that the world’s economies will shrink 4.9%, compared to a 3% contraction predicted in April.
The European Commission forecast on Tuesday that the eurozone economy will drop deeper into recession this year and rebound less steeply in 2021 than previously thought.
Poverty
The number of people living in extreme poverty on the continent could increase to 463 million because as many as 30 million jobs may be lost, the AfDB report says.
Still, the bank advises that to reopen economies “policymakers need to follow a phased and incremental approach that carefully evaluates the trade-offs between restarting economic activity too quickly and safeguarding the health of the population”.
The AfDB is Africa’s biggest multilateral bank. In March, it sold a $3 billion social bond to help countries in the region deal with the fallout from the coronavirus.
It also launched a $10 billion crisis-response facility.
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