Nigeria, other Sub-Saharan Countries economy will recover by 3.1% —IMF

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The International Monetary Fund (IMF) has said economic activity in Nigeria, other sub-Saharan Countries is projected to recover by 3.1 per cent in 2021 after declining by 3.0 per cent in 2020.

The Director, IMF’s African Department, Mr Abebe Selassie said this at the launch of the “Regional Economic Outlook for Sub-Saharan Africa: A Difficult Road to Recovery’’ on Thursday in USA.

Selassie quoted the report as saying that the region as a whole was not expected to return to 2019 levels until 2022, adding that in some of the region’s largest economies such as Angola, Nigeria, South Africa, real Gross Domestic Product (GDP) would not return to pre-crisis levels until 2023 or 2024.

For Nigeria, he said that the economy would contract by –4.3 per cent in 2020 due to low oil prices, reduced production under the Organisation of Petroleum Exporting Countries and other major oil producers (OPEC+) agreement and declining domestic demand from the lockdown.

He said that growth was projected to recover to only 1.7 per cent in 2021, responding to firmer oil prices and increasing oil production.

In South Africa, he said growth would contract by – 8.0 per cent in 2020, driven mainly by the impact of containment measures.

“Output will recover modestly during 2021, growing by 3.0 per cent, and will maintain momentum thereafter as business confidence responds to growth-enhancing reforms.”

According to Selassie, it is the worst outlook on record, adding that the figure represents a drop in per capita income of 4.6 per cent over 2020 to 2021, which is larger than in other regions.

“Sub-Saharan Africa is contending with an unprecedented health and economic crisis. In just a few months, this crisis has jeopardized years of hard-won region’s development gains and upended the lives and livelihoods of millions.

“The onset of the pandemic was delayed in sub-Saharan Africa, and infection rates have been relatively low compared to other parts of the world.

“However, the resurgence of new cases in many advanced economies and the specter of repeated outbreaks across the region suggest that the pandemic will likely remain a very real concern for some time to come.”

Selassie said nonetheless amid high economic and social costs, African countries were now cautiously starting to reopen their economies and were looking for policies to restart growth.

He said that with the imposition of lockdowns, regional activity dropped sharply during the second quarter of 2020, but with a loosening of containment measures, higher commodity prices and easing financial conditions, there had been some tentative signs of a recovery in the second half of the year.

He said that tourism-dependent economies faced the largest impact, while commodity exporting countries had also been hit hard.

According to him, growth in more diversified economies will slow significantly, but in many cases will still be positive in 2020.

“Looking forward, regional growth is forecast at 3.1 per cent in 2021. This is a smaller expansion than expected in much of the rest of the world, partly reflecting sub-Saharan Africa’s relatively limited policy space within which to sustain a fiscal expansion.

“Key drivers of next year’s growth will include an improvement in exports and commodity prices as the world economy recovers along with a recovery in both private consumption and investment.

“The current outlook is subject to greater-than-usual uncertainty with regard to the persistence of the COVID-19 shock, the availability of external financial support, and the development of an effective, affordable, and trusted vaccine.”

Selassie, however, pointed to a number of policy priorities going forward.

He said that where the pandemic continued to linger, the priority remained to save lives and protect livelihoods.

He said that for countries where the pandemic was under greater control, limited resources would mean that policy makers aiming to rekindle their economies would face some difficult choices.