Gaborone – Africa is poised to recover from its worst recession in five decades, the African Development Bank (AfDB) says.
In a report titled “Africa’s Growth Performance and Outlook Amid the COVID-19 Pandemic,” the institution says “Africa’s GDP is projected to recover in 2021 after shrinking by 2.1 percent in 2020”.
The report continues: “But it (GDP) is expected to increase by 3.4 percent in 2021. GDP per capita is estimated to have contracted by 10 percent in nominal terms in 2020. Because of the pandemic’s lower-than-expected impact on Africa, the recession in 2020 was not as severe as the Bank projected earlier.”
The report shows that Africa suffered fewer economic losses from the pandemic than other regions of the world. Similarly, the fatality rates per million people have been relatively modest in relation to other parts of the world.
The global economy is estimated to have shrunk 4.4 percent in 2020, less than the 4.9 percent contraction the IMF forecast at the onset of the crisis.
It says the better-than-anticipated growth reflected the second and third-quarter GDP performance in advanced and emerging-market economies, especially China, after lockdown measures were scaled back and prospects brightened for COVID–19 vaccines and therapeutics.
The IMF now projects 5.2 percent global growth in 2021.
The report says leading indicators point to a recovery of economic activity in the world. “Indicators of business confidence around the world, such as the industrial production indexes and the purchasing managers indexes, especially for Africa’s major trading partners, have picked up in the third and fourth quarters of 2020. High-frequency leading indicators such as major trading partners’ stock market,” the report says.
It says indexes have rebounded from declines that exceeded 50 percent between March and May 2020. Commodity prices — especially energy and metals — recovered from the mid-2020 decline but remain subdued.
The AfDB says healthcare systems have improved in many countries, thanks to increased investments and social protection schemes.
The report indicates East Africa was the most resilient region on the continent, thanks to less reliance on primary commodities and greater diversification.
Southern Africa was hardest hit by the pandemic, with an economic contraction of seven percent in 2020. However, growth is forecast at 3.2 percent in 2021 and 2.4 percent in 2022.
GDP in West Africa is estimated to have contracted by 1.5 percent in 2020, better than the initial projection of a 4.3 percent decline. North Africa contracted by an estimated 1.1 percent in 2020, propped up mainly by Egypt, which maintained 3.6 percent growth despite the relatively severe health impact of the virus in the country.