Economic Activity in Sub-Saharan Africa to rise by 2.8% in 2021 and 3.3% in 2022, says World Bank

Economic Activity in Sub-Saharan Africa to rise by 2.8% in 2021 and 3.3% in 2022, says World Bank. [Image: Courtesy]
Growth in Sub-Saharan Africa has gradually resumed in 2021, 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 World Bank says in its June 2021 Global Economic Prospects.

This increase follows last year’s shrink in Sub-Saharan output estimated at 2.4% as a result of the COVID-19 pandemic, a milder-than-expected recession.

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. 

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. 

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 hinder 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). 

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.

Despite the growth noted in The World Bank’s Outlook which projects that risks are to the downside, Food insecurity remains a key risk as food prices have risen by more than 20 percent early this year in Angola, Ethiopia and Nigeria.

Other challenges such as floods, drought could destroy crops, and Rising conflicts in various countries would weaken recoveries as well.

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. 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. 

In overall, the global economy is expected to expand 5.6% in 2021, the fastest post-recession pace in 80 years, largely on strong rebounds from a few major economies. However, many emerging markets and developing economies continue to struggle with the COVID-19 pandemic and its aftermath.