Sub-Saharan Africa may fall into recession in 2020 for the first time in 25 years due to the rapidly spreading coronavirus outbreak, World Bank said in a new forecast on Thursday.
The bank’s Africa’s Pulse report said the region’s economy will contract 2.1% to 5.1% from growth of 2.4% last year and that the coronavirus will cost sub-Saharan Africa $37 billion to $79 billion in output losses this year due to trade and value chain disruption among other factors.
So far, Africa has at least 10,956 confirmed cases of COVID-19, 562 death and 1,149 recoveries according to a tally based on government statements and WHO data.
“The COVID-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard,” World Bank Vice President for Africa Hafez Ghanem said.
The World Bank as well as International Monetary Fund are racing to provide emergency funds to African countries and others to fight the virus and reduce the impact of shutdowns aimed at curbing its spread.
Tourism is one of the sectors that has been hit hard by the outbreak of the virus which led countries on the continent to suspend international passenger travel.
According to the World Health Organization, various African governments have announced lockdowns or enforced curfews in response to the virus, which was slow to reach many African countries but is now growing exponentially.
World Bank says real gross domestic product growth was projected to fall sharply particularly in the region’s three largest economies- Nigeria, Angola and South Africa.
Oil-exporting countries are also expected to be hit hard seeing growth would likely weaken substantially in the West African Economic and Monetary Union and the East African Community due to weak external demand, disruptions and supply chains and domestic production.
World Bank also stated that the spread of the virus had the capability to lead the continent to a food security crisis, with agricultural production forecast to contract 2.6 % and up to 7% in the event of trade blockages.
“Food imports would decline substantially (as much as 25% or as little as 13%) due to a combination of higher transaction costs and reduced domestic demand,” the bank said in a statement accompanying the report.
China, the United States and other bilateral creditors have been called upon to temporarily suspend debt payments by the poorest countries so they can use the money to stop the spread of the disease and reduce its financial impact.
“There will be need for some sort of debt relief from bilateral creditors to secure the resources urgently needed to fight COVID-19 and to help manage or maintain macroeconomic stability in the region,” Cesar Calderon, the bank’s lead economist and lead author of the report, said.
African policymakers should focus on saving lives and protecting livelihood by spending money to strengthen health systems and taking quick actions to minimize disruptions in food supply chains, according to World Bank.
The bank also recommended social protection programmes including cash transfers, food distribution and fee waivers to support citizens, especially those working in the informal sector.
