The World Bank projects that after contracting by an estimated 3.7 per cent in 2020 due to the Covid-19 pandemic and its effects, economic growth in Sub-Saharan Africa is expected to bounce back moderately to 2.7 per cent in 2021.
The World Bank, in its January 2021 Global Economic Prospects report, forecast recovery buoyed by private consumption and investment which are likely to be slower than previously expected.
Growth in export is expected to gradually speed up, in line with the rebound in activity among major trading partners.
“The resumption in activity in advanced and emerging economies and key trading partners of the region (Europe, China, US) is chiefly underpinned by positive news on vaccine development and rollout as well as new rounds of fiscal stimulus,” the World Bank disclosed.
The expectations of a sluggish recovery in Sub-Saharan Africa reflect persistent COVID-19 outbreaks in several economies that have inhibited the resumption of economic activity.
The World Bank projects that the COVID-19 pandemic could cause per capita incomes to drop by 0.2 per cent in 2021, setting Sustainable Development Goals (SDGs) further out of reach in Sub Saharan African Countries. It is expected that this reversal may push tens of millions more people into extreme poverty over last year and this year.
Some of the major risks to be faced include growth in major trading partners falling short of expectations and there may be challenges in the distribution of a COVID-19 vaccine in the region.
Government debt in the region has increased sharply to an estimated 70 per cent of GDP last year, elevating concerns about debt sustainability in some economies. Banks may face sharp increases in non-performing loans as companies struggle to service their debt due to falling revenues. Lasting damage of the pandemic could depress growth in the long term through the chilling effects of high debt on investment, the impact of lockdowns on schooling and human capital development, and weaker health outcomes.
