Harare – Southern Africa will register economic recovery this year, with GDP expected to grow by 2,9 percent after cooling off 4,9 percent in 2020, according to the African Development Bank (AfDB).
The Pan-African lender said recovery would be underpinned by reopening of economies as new coronavirus-induced lockdowns taper off.
SADC suffered a huge blow last year as key industries like tourism and mining were almost grounded by a global travel ban, and cross-border trade almost came to a standstill.
In its report Southern Africa Economic Outlook, the AfDB says better times are ahead.
The region will recover by 2,9 percent; while growth is also projected in Central Africa (2,6 percent), East Africa (3,5 percent), North Africa (3,3 percent) and West Africa (2,5 percent).
Cumulatively, AfDB projected that African growth will be three percent this year, after falling by 1,7 percent in 2020.
The lender said it had been impressed by the resilience exhibited by Mauritius and Madagascar, as well as stronger fiscal management in other SADC countries.
But it was it still worried about developments in South Africa – the region’s biggest economy – which is expected to slow down again this year after suffering the biggest human casualties out of the pandemic last year.
AfDB said SADC’s government must watch developments in the Rand Union and the South African Customs Union (SACU), which tend to be affected by South African fragility.
“Whilst southern Africa’s economic growth had initially projected to recover in 2020 to 2,1 percent, and further to 2,5 percent in 2021 amid a recovery in commodity prices, a rebound in oil production in Angola, and the implementation of structural and pro-business reforms, the COVID-19 pandemic is expected to erode this recovery due to trade disruptions, travel bans, depressed demand and earnings, volatile markets, and global credit distress,” said AfDB.
“The impact of Covid-19 in South Africa, being one of the biggest economies in the region, is projected to trickle to the rest of the Southern African economies. For member States of the Rand Monetary Area and the Southern African Customs Union (SACU), the impact of exchange rate depreciation and decline in SACU revenues would make Botswana, Eswatini, Lesotho and Namibia more vulnerable to South Africa’s impending contraction in economic growth, while Mozambique’s sales of gas and electricity could be adversely affected. Countries that rely on tourism sector such as Mauritius will be adversely affected. Madagascar and Mauritius, the individual country growth rates have been fluctuating over the years. Madagascar’s growth rates have shown a positive trend since 2010, rising from 0,6 percent in 2010 to 3,3 percent in 2014 before accelerating to 5,2 percent in 2018, and an estimated 5,2 percent in 2019. Mauritius has sustained a relatively stable growth path compared to other countries in the region, averaging about 3,7 percent between 2014 and 2019. The immediate outlook however, depends on the spread of new cases. When compared with other regions of the world, Southern Africa’s Gross Domestic Product growth between 2011 and 2017 was higher than that of advanced economies,” said AfDB.
“The regional average annual current account balance improved between 2017 and 2018 from -2,5 percent to -2,2 percent of GDP. At the country level, Eswatini has had a consistent current account surplus from 2016 onwards and is projected to have a similar trend in 2020 and 2021. The current account surplus emanates from export growth and is projected to remain positive, driven by manufactured export growth,” said AfDB.