Geneva, SWITZERLAND
Economic activity in Sub-Saharan Africa
region is expected to contract by 2.8 percent in 2020, according to a regional
outlook by the World Bank.A currency trader performs a transaction on the streets of Harare, Zimbabwe.
The Bank
said that the contraction of the region, which is yet to see the COVID-19
pandemic peak, is the deepest on record.
The Bank
predicts that the economy of Nigeria, the continent’s largest one, will reduce
by about 3.2 percent due to the collapse in oil prices. Nigeria is heavily
reliant on sales of crude oil for close to 90 percent of foreign exchange
earnings and more than half of government revenue.
The
figure given by the World Bank is more optimistic than one given by Nigerian
government officials last month of 3.4 percent. Finance Minister Zainab Ahmed
said that the economy could contract by as much as 8.9 percent this year in a
worst-case scenario without any form of economic stimulus.
“Economic
activity among commodity importing economies is anticipated to shrink this year
despite lower oil prices, as international travel restrictions weigh on tourist
visits,” the World Bank said.
Meanwhile,
Africa’s second largest economy, South Africa, is expected to reduce by 7.1
percent. This is attributed to the strict measures imposed by the government to
contain the spread of the deadly virus. South Africa is the worst affected
country by COVID-19 on the continent.
At the
start of this month, The South African government began efforts to revive the
battered economy by relaxing a number of measures. The government partially
lifted the COVID-19 lockdown, allowing people to go to work, worship or
shopping and mines and factories to run at full capacity.
“Industrial
commodity exporters’ GDP is similarly anticipated to contract in 2020 as
domestic disruptions are compounded by low prices for oil and metals,” the
outlook said.
The South
African Reserve Bank estimated that the economy, which is also grappling with a
power crisis, could contract by 7 percent.
Agricultural
commodity exporters are also expected to experience a collapse in economic
activity this year as foreign direct investment and tighter financial
conditions delay investment, the Bank added.
The World
Bank said that a combination of factors arising from the COVID-19 pandemic has
resulted in deep recessions in majority of global economies.
The
effects of the pandemic have been felt as much economically as they have been
on health and social sectors.
The
United Nations Economic Commission for Africa (UNECA) projected that the
pandemic could push 29 million people into extreme poverty across Africa.
According to the ECA, the containment measures have already cost the region about $69 billion per month and are expected to have a negative impact on the implementation of the Sustainable Development Goals (SDGs) in the region. - Africa
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