The World Bank estimates that the global economy is expected to grow by 4 percent in 2021. However, its projection is based on how successful the COVID-19 vaccine rollout will be and whether the vaccine(s) are effective.
In Sub-Saharan Africa, the economy is expected to rebound by moderately to 2.7 percent in 2021, after contracting by an estimated 3.7 percent in 2020. While economic activity in North Africa is is on course to rise by 2.1%
In October, the World Bank projected the economy in the eastern and southern Africa region to grow by 2.7%. While Nigeria’s economic recovery will be weak, the western and central Africa region is expected to experience an average growth of 1.4%. Many countries have seized the opportunity within the crisis to move faster on necessary reforms and investments that will be crucial for long-term development. However, concerns of a second wave are fueling further uncertainty.
The pandemic could stifle global economic growth over the next ten years and could even cause a ‘lost decade’ if the economy is mismanaged, the World Bank said.
The worst-case scenario, caused by delays to roll out the vaccine or an increase in cases, could reduce growth to 1.6 percent; and in the best case scenario with successful pandemic control and a faster vaccination process, could accelerate growth to about 5 percent.
According to World Bank Group President David Malpass, the global economy appears to be emerging from one of its deepest recessions and beginning a subdued recovery but policymakers face formidable challenges-in public health, debt management, budget policies, central banking and structural reforms-as they try to ensure that this still-fragile global recovery gains traction.
“To overcome the impacts of the pandemic and counter the investment headwind, there needs to be a major push to improve business environments, increase labor and product market flexibility, and strengthen transparency and governance,” Malpass said.