Pandemic may cause Africa's 1st recession in 25 years – World Bank
The World Bank said the continent is highly vulnerable to declining trade and tourism as well as falling prices for oil and mineral exports.
JOHANNESBURG – The World Bank warned on Thursday that sub-Saharan Africa could slip into its first recession in a quarter of century because of the coronavirus pandemic on the world's most impoverished continent.
"We project that economic growth in Sub-Saharan Africa will decline from 2.4% in 2019 to -2.1 to -5.1% in 2020, the first recession in the region in 25 years," the Bank said in an assessment.
The virus has arrived late in Africa compared to elsewhere but is spreading rapidly in some countries, and the continent is highly vulnerable to declining trade and tourism as well as falling prices for oil and mineral exports, it 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," said Hafez Ghanem, the Bank's vice president for Africa.
The impact on African countries will vary, the twice-yearly economic update report said.
It warned, however, that real gross domestic product was forecast to "fall sharply" in the three largest economies – Nigeria, South Africa and Angola – because of "persistently weak growth and investment" and declining commodity prices.
The continent's most industrialised country, South Africa, slipped into recession in the final quarter of 2019 and has posted its weakest growth rates ever in the past five years -- never exceeding 1.3 percent and in some years falling below 1%.
The collapse in oil prices "is catastrophic" for public finances in the continent's leading crude producers of Nigeria and Angola, said Albert Zeufack, the Bank's chief economist for Africa.
"We are living in unprecedented times," Zeufack said. "The world has not seen this since World War II," he said during a briefing streamed from Washington.
"This is going to be the deepest recession globally but also affecting Africa, and the reason why this is so serious is because it is not just a health crisis, it’s a health crisis that’s going to be combined with an economic crisis and potentially a food crisis in African countries."
While governments are taking varying steps to deal with the economic fallout of the pandemic, the bank says African countries will inevitably require debt relief.
"There is no doubt 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," said Cesar Calderon, economist and lead author of the report.
The Bank said it will giving out up to $160 billion in financial support over the next 15 months to help countries protect the vulnerable, support businesses and shore up economic recovery.
The pandemic will also worsen food shortages on a continent already grappling with drought, locust invasions conflict, and violence, the Bank said.
Domestic currencies are losing value while prices of staple foods are rising in many parts of the continent.
The UN World Food Programme (WFP) said Wednesday that since December, hundreds of thousands more people had already slipped into the severely hungry category in Zimbabwe, where more than half of the population faces hunger.