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AFRICA on difficult road to recovery –IMF

The International Monetary Fund IMF has said that African is facing difficult recovery ahead, as policy makers have fewer resources at their disposal as they cautiously lift restrictions and reopen economies. The Fund in its latest Regional Economic Outlook for Sub-Saharan Africa also said that transformative reforms are urgently needed for rekindling resilient growth, which will be difficult without external support.

“Sub-Saharan Africa is contending with an unprecedented health and economic crisis,” stressed Abebe Aemro Selassie, Director of the IMF’s African Department. “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.

“Nonetheless, amid high economic and social costs, African countries are now cautiously starting to reopen their economies and are looking for policies to restart growth. 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 have been some tentative signs of a recovery in the second half of the year.

“Overall, the region is projected to contract by 3.0 percent in 2020, the worst outlook on record. Tourism-dependent economies faced the largest impact, while commodity exporting countries have also been hit hard. 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 percent 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 whichto sustaina 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 ef f ective, affordable, and trusted vaccine.”

Against this backdrop, Mr. Selassie pointed to a number of policy priorities going forward.

“Where the pandemic continues to linger, the priority remains to save lives and protect livelihoods. For countries where the pandemic is under greater control, limited resources will mean that policy makers aiming to rekindle their economies will face some difficult choices.

 

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