In sub-Saharan Africa, the economic impact of the COVID-19 shock is severe.
However, countries in the region are weathering the storm so far. Economic activity in sub-Saharan Africa is estimated to contract by 2.0% in 2020, the lower end of the forecast range in the April 2020 issue of The pulse of Africa, and less than in some emerging markets and developing economies.
Data available from the last two quarters of 2020 indicate a rebound in economic activity which explains why the contraction in the region was in the lower bound of forecasts. This reflected a slower spread of the virus and a drop in COVID-19-related mortality in the region, strong agricultural growth and a faster than expected recovery in commodity prices.
Nonetheless, COVID-19 plunged the region into its first recession in more than 25 years, with activity contracting nearly 5.0% per capita. Vulnerable groups, such as the poor, informal sector workers, women and youth, have suffered disproportionately from reduced opportunities and unequal access to social safety nets.
Economic activity in the region is expected to strengthen as actions are taken to contain further waves of the pandemic and vaccine rollout accelerates. The 2021 baseline projection for the region is partly pulled down by the second wave of COVID-19 infections, driven by new, more transmissible variants, which appear to be worse than the first wave.
Africa’s economic recovery is expected to be multi-speed, with significant variation across countries
The COVID-19 pandemic has exacerbated public debt vulnerabilities, and significant assistance will be needed to address liquidity and solvency issues. The pandemic will continue to put pressure on the region’s macroeconomic policy framework.
Faster progress in vaccine deployment along with credible policies to boost private investment would accelerate growth to 3.4% in 2021 and 4.5% in 2022 in sub-Saharan Africa. As countries in sub-Saharan Africa embark on a recovery path from the COVID-19 pandemic, securing growth beyond 4% from 2022 will be critical.
On the road to recovery, countries in sub-Saharan Africa will need sufficient financing to invest in human capital, energy, digital and physical infrastructure. The outbreak of the COVID-19 pandemic has severely affected economic activity, including employment, in sub-Saharan Africa.
Policies that encourage investment in innovation and digital technologies can help reset economic structures and make it easier to catch up with the rest of the world.
Africa’s Pulse: An Analysis of the Issues Facing Africa’s Economic Future is available online.