Sub-Sa­ha­ran Africa set for deeper pain from virus, IMF warns

China Daily (Hong Kong) - - WORLD - By EDITH MUTETHYA in Nairobi, Kenya edith­mutethya@chi­nadaily.com.cn

Sub-Sa­ha­ran Africa’s econ­omy is pro­jected to con­tract by 3.2 per­cent in 2020, markedly worse than the 1.6 per­cent con­trac­tion an­tic­i­pated in April, ac­cord­ing to the In­ter­na­tional Mone­tary Fund’s lat­est re­gional eco­nomic outlook re­port.

The pro­jected re­duc­tion re­flects a weaker ex­ter­nal en­vi­ron­ment and mea­sures to con­tain the coro­n­avirus out­break, which has been ac­cel­er­at­ing in the past few weeks in sev­eral sub-Sa­ha­ran African coun­tries.

IMF projects growth to re­cover to 3.4 per­cent in 2021 sub­ject to the con­tin­ued grad­ual eas­ing of re­stric­tions that has started in re­cent weeks and, im­por­tantly, if the re­gion avoids the same epi­demic dy­nam­ics that have played out else­where.

Growth is ex­pected to fall the most in tourism-de­pen­dent and re­source-in­ten­sive coun­tries. Growth in non-re­source in­ten­sive coun­tries is ex­pected to come to a near stand­still.

On av­er­age, per capita in­comes across the re­gion will fall by 7 per­cent rel­a­tive to ex­pected levels back in Oc­to­ber 2019 and close to levels seen nearly a decade ago, the IMF said.

The outlook re­port said the coro­n­avirus pan­demic is likely to cause the first in­crease in global poverty since 1998.

Ac­cord­ing to World Bank es­ti­mates, in Sub-Sa­ha­ran Africa the pan­demic could push about 26 mil­lion more peo­ple into ex­treme poverty in 2020, and up to 39 mil­lion in case down­side risks to growth ma­te­ri­al­ize.

At the same time, in­come in­equal­ity is ex­pected to in­crease, as lock­downs dis­pro­por­tion­ately af­fect in­for­mal sec­tor work­ers and small and medium-sized com­pa­nies in the ser­vices sec­tors.

“This is a fast-mov­ing cri­sis, and re­cent devel­op­ments sug­gest that the down­turn will be sig­nif­i­cantly larger than we had an­tic­i­pated only 10 weeks ago,” Abebe Aemro Se­lassie, the direc­tor of the IMF’s African Depart­ment said.

“The risks we high­lighted in April all con­tinue to be a con­cern, but the de­te­ri­o­ra­tion of the global outlook has been par­tic­u­larly strik­ing.”

Se­lassie said the growth rate in new cases has slowed slightly since April, and a num­ber of coun­tries have cau­tiously eased some of their mit­i­ga­tion mea­sures.

“How­ever re­gion­wide, the pan­demic is still in its ex­po­nen­tial phase. Sub-Sa­ha­ran Africa has re­cently ex­ceeded more than a quar­ter of a mil­lion con­firmed cases, and new cases are still dou­bling ev­ery two to three weeks,” he said.

‘Pri­or­ity is to pro­tect lives’

“Given the re­gion’s al­readys­tretched health­care ca­pac­ity, the im­me­di­ate pri­or­ity is still to pro­tect lives and to do what­ever it takes to strengthen lo­cal health sys­tems and con­tain the out­break.”

Against the back­drop, Se­lassie pointed to a num­ber of pol­icy pri­or­i­ties go­ing for­ward. He said an im­me­di­ate pri­or­ity re­mains the preser­va­tion of health and lives.

Se­lassie said that as the re­gion starts to re­cover, au­thor­i­ties should grad­u­ally shift from broad fis­cal sup­port to more af­ford­able, tar­geted poli­cies. They should con­cen­trate in par­tic­u­lar on the poor­est house­holds and those sec­tors hit hard­est by the cri­sis.

Once the cri­sis has waned, he said, coun­tries should re­fo­cus their at­ten­tion on trans­form­ing their economies, cre­at­ing jobs, and boost­ing liv­ing stan­dards, claw­ing back some of the ground lost dur­ing the cur­rent cri­sis.

“Nonethe­less, more in­ter­na­tional sup­port is needed ur­gently. This year alone, coun­tries in the re­gion face ad­di­tional fi­nanc­ing needs of over $110 bil­lion, $44 bil­lion of which is yet to be fi­nanced,” Se­lassie said.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.