Africa faces slow economic recovery from pandemic, says IMF
Sub-Saharan Africa is forecast to contract by a record 3% in 2020, and SA could contract by 8%
Abuja — Sub-Saharan African economies face a slow recovery from the coronavirus pandemic and the region’s economic growth will fall behind the rest of the world next year, according to the International Monetary Fund (IMF).
GDP in the region is projected to expand 3.1% next year, compared with a forecast of 5.2% for the world economy. This partly reflects Sub-Saharan Africa’s relatively limited space for fiscal expansion, the IMF said in its regional economic outlook report published on Thursday.
Until recently home to some of the world’s fastest growing economies, output in Sub-Saharan Africa is forecast to contract by a record 3% in 2020 after the pandemic closed down cities and trading channels and curbed commodity prices, hitting large oil producers such as Nigeria and Angola.
The continent’s most-industrialised economy, SA, could contract by 8%. It will take at least until 2022 for the region to return to pre-crisis economic growth levels, the IMF said.
The shock of the pandemic will push more countries in the region into debt distress and governments should be cautious about returning to international debt markets, according to the IMF’s Africa department director Abebe Aemro Selassie.
“Borrowing plans have to be contingent on debt being sustainable, first and foremost, and also that there are credible policies in place that will ensure debt can be repaid,” Selassie said in an interview.
A combination of dwindling revenues and higher spending during the pandemic will likely push debt-service costs in the region to 27% of GDP compared with a projection of 22% before the crisis.
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