Sub-Saharan Africa Economic Activity to Rise By 3.3% in 2022 – World Bank

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Economic activity in the Sub-Saharan Africa region is on course to rise by 2.8% in 2021 and 3.3% in 2022.

Growth is forecast to resume to 2.8% this year and firm to 3.3% in 2022, underpinned by stronger external demand, mainly from China and the United States, higher commodity prices, and containment of COVID-19.

Procurement and logistical challenges are expected to continue to hobble the pace of vaccination despite the provision of vaccines by COVAX. Policy uncertainty and the lingering effects of the pandemic are expected to delay major investments in infrastructure and extractives and to weigh on the recovery (Central African Republic, Equatorial Guinea, Niger, Kenya).

Sub-Saharan Africa Economic Activity women inflation Global Debt COVID-19 Response Drives $15 Trillion Surge In Global Debt, Set To Hit 365% of GDP By End Of 2020

Per capita income levels in 2022 are expected to be 4% lower on average than in 2019. Conditions in the region’s fragile and conflict-affected countries are expected to be particularly challenging; their average output level in 2022 is forecast to be 5.3% below its size in 2019.

Growth in Nigeria is expected to resume at 1.8% in 2021 and edge up to 2.1% next year, assuming higher oil prices, structural oil sector reforms, and market-based flexible exchange rate management. South Africa is forecast to grow 3.5% this year and 2.1% in 2022.

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Fiscal pressures and weak public investment growth dim South Africa’s near-term growth prospects, and structural impediments to potential growth remain. Angola is projected to expand 0.5% in 2021 and 3.3% in 2022, on the back of stronger oil prices and government consumption.

Elsewhere in the region, growth in industrial commodity exporters excluding Angola, Nigeria and South Africa is expected to pick up to 2.4 percent in 2021-22. In agricultural commodity exporters, growth is forecast to resume at a faster pace of 4.5% a year on average in 2021-22.

Output in Sub-Saharan Africa shrank an estimated 2.4% in 2020 as a result of the
COVID-19 pandemic, a milder-than-expected recession. Growth has gradually resumed this year, reflecting positive spillovers from strengthening global economic activity, including higher oil and metal prices, and some progress in containing COVID-19, especially in Western and Central Africa.

The pandemic has contributed to wider budget deficits and a spike in government debt, heightening the risk of debt distress in some countries. Activity in the three largest economies – Angola, Nigeria, and South Africa – has partially recovered. Many industrial and agricultural commodity-exporting countries experienced deep contractions last year.

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In tourism reliant countries, international arrivals have been at a near-halt, and tourism is likely to remain slow until wider vaccination permits safe reopening to international travel. Despite improvement, COVID-19 has continued to have adverse impacts on health, schooling, investment, and economic growth.

Risks:

Risks are to the downside. While some countries (Ghana, Nigeria, South Africa) are upgrading national vaccine distribution systems, procurement and logistical hurdles in many other countries could further slow vaccinations. An oil price drop could dent revenues for some oil exporters.

Food insecurity remains a key risk as food prices have risen by more than 20 percent early this year in Angola, Ethiopia and Nigeria. Flood and drought could also destroy crops, exacerbate food price inflation, and further weigh on household consumption.

Rising conflicts could weaken recoveries. A sudden rise in sovereign borrowing costs could instigate financial pressures in some countries and high debt burdens and fiscal pressures could become more acute.

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At the same time, the pace of vaccinations could surpass expectations, restoring consumer and business confidence and strengthening the recovery. A stronger-than-expected rally in metal and oil prices could boost revenues.

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