Africa's GDP to contract 1.7% this year, AfDB says
The multilateral lender expects a partial recovery to expansion of about 3% next year
The African Development Bank slashed its forecast for economic growth on the continent due to the impact of the coronavirus and now sees gross domestic product contracting by at least 1.7 per cent this year, and double that if the pandemic continues into the second half of 2020.
That new projections released in a supplement to its Economic Outlook this week compared with a January growth forecast of 3.9 per cent. If the disease isn’t swiftly addressed, Africa faces a major humanitarian and public health disaster, according to the report.
The Abidjan, Ivory Coast-based multilateral lender expects a partial recovery to expansion of about 3 per cent next year. However, that won’t make up for an estimated cumulative loss to Africa’s GDP of $173.1 billion (Dh635.7bn) to $236.7bn for 2020 and 2021 due to the pandemic, it said.
Tourism-dependent countries, oil exporters and other resource-intensive economies have been hardest hit.
The number of people living in extreme poverty on the continent could increase to 463 million because as many as 30 million jobs may be lost, according to the report. Still, the lender advises that to reopen economies “policy makers need to follow a phased and incremental approach that carefully evaluates the trade-offs between restarting economic activity too quickly and safeguarding the health of the population".
The only region on the continent expected to show economic growth this year is East Africa. Southern Africa will be the hardest hit, contracting as much as 6.6 per cent.
East Africa’s “growth is largely driven by strong public spending in infrastructure, rising domestic demand, the benefit of improved stability, new investment opportunities and incentives for industrial development", the AfDB said in a separate report published on Wednesday.
The AfDB is Africa’s biggest multilateral bank. In March, it sold a $3bn social bond to help countries in the region deal with the fallout from the coronavirus. It also launched a $10bn crisis-response facility.
Updated: July 8, 2020 09:00 PM