The World Bank bumps up Africa’s recovery

CONRAD ONYANGO, BIRD

GLOBAL financial institutions are revising upwards their outlook on Africa’s economic growth, signalling that the continent is recovering from the impact of COVID-19 and becoming more resilient, despite slower vaccine rollout.

The International Monetary Fund and World Bank’s latest economic outlook shows Africa is set to emerge from the 2020 recession sparked by the COVID-19 pandemic.

The World Bank, in its latest edition of “Africa’s Pulse”, projects the economy will expand by 3.3 percent in 2021 – a full percentage point rise compared to its April forecast.

“This rebound is currently fueled by elevated commodity prices, a relaxation of stringent pandemic measures, and recovery in global trade,” said the World Bank.

The International Monetary Fund (IMF) shares similar sentiments in its regional economic outlook for Sub-Saharan Africa, which it says is set to grow by 3.7 percent in 2021 and at an even higher pace (3.8 percent) in 2022.

“The recovery is supported by favourable external conditions on trade and commodity prices. It has also benefited from improved harvests and increased agricultural production in a number of countries,” says Abebe Aemro Selassie, Director, African Department, IMF.

A surge in the price of metals like copper, lead, manganese and nickel, above pre-pandemic levels, as well as record-high prices of coffee, sugar and wheat over the past few years has helped smaller and non-resource-rich economies rebound from the pandemic faster than expected.

Cote d’Ivoire and Kenya are seen by World Bank as recovering strongly – 6.2 and 5 percent respectively – with other non-resource rich countries projected to record an average growth rate of 3.6 percent this year.

The IFM has also upgraded growth for non-oil resource-intensive countries by 1.2 percentage points to 4.7 percent, suggesting higher growth projections for two of the region’s largest economies – South Africa (5.0 percent) and Nigeria (2.6 percent), compared to the 4.6 percent and 2.4 percent forecast of the World Bank.

Some tourism-dependent countries like Comoros (1.6) and The Gambia (4.9), have also fared well, due to significant remittance inflows which IMF analysts say have supported private consumption.

The global fund sees remittances growing by 2.6 percent in 2021 following a better-than-expected outcome in 2020.
A higher growth rate across the continent shows higher prospects for local businesses which the World Bank attributes to the ability by some countries to tap opportunities from the crisis to foster structural and macroeconomic reforms.

“Several countries have embarked on difficult but necessary structural reforms, such as the unification of exchange rates in Sudan, fuel subsidy reform in Nigeria, and the opening of the telecommunications sector to the private sector in Ethiopia,” said the Brenton Woods Institution.

To sustain the positive trajectory, the institutions call for faster, sustained vaccine deployment which they say would accelerate the region’s growth to 5.1 percent in 2022 and 5.4 percent in 2023.

According to the World Health Organisation, Africa still faces a 275 million shortfall of COVID-19 vaccines against a year-end target of fully vaccinating 40 percent of its people. It says the continent has fully vaccinated 77 million people – just 6 percent of its population.

Based on the latest data from the global health body, only three African countries – Seychelles, Mauritius and Morocco – have already met the goal that was set in May by the World Health Assembly, the world’s highest health policy-setting body. Tunisia and Cape Verde are also expected to hit the target by year-end.

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