ADDIS ABEBA – Sub-Saharan African economies face a slow recovery from the coronavirus pandemic and the region’s economic growth will fall behind the rest of the world next year, according to the International Monetary Fund.
Sub-Saharan Africa’s economy will not rebound to pre-pandemic growth levels until 2022 with major economies likely to take even longer to recover, the Fund wrote in a report published on Thursday.
The Fund forecasts the regional economy will shrink by 3% this year with tourism and oil-dependent countries hit hardest by the fallout from COVID-19. It is forecast to return to growth next year with an expansion of 3.1%.
“And even this outcome is subject to some key downside risks,” the IMF wrote in its regional economic outlook for Africa.
South Africa, Nigeria and Angola — the continent’s largest economies — will see sharp contractions of 8%, 4.3% and 4% respectively, according to the report, and will not see growth back at 2019’s levels until at least 2023 or 2024.
Until recently home to some of the world’s fastest growing economies, output in sub-Saharan Africa is forecast to contract by a record 3% this year after the pandemic closed down cities and trading channels and curbed commodity prices, hitting large oil producers such as Nigeria and Angola.
The shock of the pandemic will push more countries in the region into debt distress and governments should be cautious about returning to international debt markets, according to the IMF’s Africa department Director Abebe Aemro Selassie.
“Borrowing plans have to be contingent on debt being sustainable, first and foremost, and also that going forward, that there are credible policies that will ensure that debt can be repaid,” Abebe said in an interview.
A combination of dwindling revenues and higher spending during the pandemic will likely push debt-service costs in the region to 27% of GDP compared with a projection of 22% before the crisis.