A mine worker wearing a face masks boards a bus ahead of his shift, amid a nationwide coronavirus disease (COVID-19) lockdown, at a mine of Sibanye-Stillwater company in Carletonville, South Africa, May 19, 2020. (Photo: Agencies)
Economic activities in Sub-Saharan Africa will shrink by 2.8 percent in 2020 owing to the impacts of the coronavirus pandemic, according to World Bank forecasts.
Per capita Gross Domestic Product is anticipated to fall even more sharply, likely pushing millions in the region back into extreme poverty.
The World Bank forecasts growth to resume to 3.1 percent in 2021, assuming the pandemic fades in the second half of the year, that domestic outbreaks of the virus follow a similar path, and that growth in major trading partners rebounds.
The region has suffered as a result of the impact of the pandemic on its key trading partners, the disruption to global travel and supply chains, and the collapse in global commodity prices, particularly for oil and industrial metals.
These shocks have heightened risk aversion among investors and prompted unprecedented capital outflows, the World Bank said.
The Nigerian economy is expected to shrink by 3.2 percent this year, given the collapse in oil prices, which represent 80 percent of the country's exports, about a third of banking sector credit, and half of government revenues.
South Africa's output is forecast to contract 7.1 percent in 2020, the deepest contraction in a century, as stringent but necessary containment measures curtail economic activity.
In Nigeria and South Africa, activity has fallen precipitously in the first half of the year. Several industrial commodity exporters, such as Angola, the Democratic Republic of Congo, and Ghana, have had to cope with weaker external demand and lower prices for oil and metals, in addition to domestic disruptions.
Agricultural commodity exporters, including Côte d’Ivoire, Ethiopia and Kenya, have suffered from a collapse in demand, as well as disruptions to supply chains, the World Bank said.
The fall in global travel as a result of the pandemic has hit hard in countries with substantial exposure to travel and tourism, such as Cabo Verde, Ethiopia, Mauritius and Seychelles.
As per the current scenario, Sub-Saharan Africa faces daunting hurdles to contain coronavirus given weak health care capacity, lack of access to basic sanitation, and the prevalence of informal economic activity across the region.
The World Bank said there are growing concerns that the pandemic may cause a food security crisis in the region as border closures and trade restrictions disrupt trading in food and agricultural products.
The region's large numbers of displaced people could complicate efforts to prevent the spread of coronavirus, the bank said.
Additionally, there is the risk of social unrest as governments prioritize efforts to thwart the virus and peacekeeping efforts lose momentum.
"Rising unemployment, falling incomes, and potential shortages of essential items could lead to instability and weigh on activity well after the pandemic has faded," the forecast said.
The global economy is forecast to shrink by 5.2 percent this year, representing the deepest recession since the World War II, with the largest fraction of economies experiencing declines in per capita output since 1870.