Most African economies are projected to shrink this year due to the pandemic. Although Africa accounts for just a fraction of total cases of the disease which has infected more than one million people worldwide as of April 9.
African economies are already facing an impending global economic downturn, plummeting oil and commodity prices and an imploding tourism sector.
Before the onset of the pandemic, continent-wide gross domestic product (GDP) growth had been projected by the African Development Bank to reach 3.4% this year. However, in both scenarios modelled by the AU study titled Impact of the coronavirus (COVID 19) on the African Economy – GDP will now shrink.
Under what the AU researchers deemed their realistic scenario, Africa’s economy will shrink 0.8%, while the pessimistic scenario said there would be a 1.1% dip.
Up to 15% for foreign direct investment could disappear. According to the study, African governments could lose up to 20 to 30% of their fiscal revenue, estimated at 500 billion in 2019.
World Bank warns on sub-Saharan Africa recession
The World Bank is projecting that sub-Saharan Africa will go into recession for the first time in a quarter a century as the Covid-19 pandemic disrupts economies.
The global financial institution says the region’s economy could contract by -2.1% to as much as -5.1% this year.
The outbreak has spread to 52 countries on the continent that have cumulatively reported 10,250 confirmed cases and 492 deaths.
The World Bank and the International Monetary Fund are calling for a ‘debt standstill’ from creditors to free up money to go into saving lives and protecting livelihoods.
Africa was among the last to be hit by Covid-19, and the response from most countries was swift and hard – border closures, lockdowns and the quarantine of travellers.
The immediate result was a major disruption to trade. The World Bank says reduced access to agricultural inputs, disruption of supply chains and loss of livelihoods could lead to a food shortage.