The 2020 reports of the African Economic Outlook published by the African Development Bank is projecting a weak Real GDP growth of 1.7 percent in 2020, which shows a drop of 5.6 percent points from January 2020 to date as a result of COVID-19. The report stated that if the pandemic continues beyond the first half of 2020, there would be a deeper GDP contraction of 3.4 percent, dropping down by 7.3 percent from the growth projected before the outbreak of COVID-19.
Accordingly, “Africa could suffer GDP losses in 2020 between $145.5 billion as baseline and $189.7 billion in a worst case scenario, from the pre-COVID-19 estimated GDP of $2.59 trillion for 2020.” The most affected economies according to the Outlook report are those with poor healthcare systems especially those that rely heavily on tourism, international financial flow but the overall impact of the pandemic on socioeconomic outcomes remains uncertain.
The continents GDP will depend crucially on the unfolding epidemiology of the virus, the extent of its impact on demand and supply, which according to the report is determined by the effectiveness of public policy responses, and the persistence of behavioral changes. However, the African Development Bank in the African Economic Outlook 2020 says, the continent growth stands to rebound to 3 percent in 2021. The report warned that, “Governments and development partners must respond in a more coordinated, targeted, and rapid manner to be effective in limiting impact; An additional 49 million Africans could be pushed into extreme poverty by the pandemic and its aftermath of which West and Central Africa stands to be worst hit.”
The report called for urgent policy interventions to mitigate the impact of the pandemic: “Across Africa, the response must be well-sequenced and multipronged, involving a public health response to contain the spread of the virus and minimize fatalities, a monetary policy response to ease liquidity constraints and solvency risks, and a fiscal response to cushion the economic impacts of the pandemic on livelihoods and to assist businesses.”
Executive Director of the African Economic Research Consortium and Former Governor of the Central Bank of Kenya, Njuguna Ndung’u emphasized that, the African Economic Outlook 2020 “… will be useful now and in the future. It gives us important short, medium- and long-term strategies because crises like COVID-19 present a good opportunity for innovative reforms in countries.”
By Mohamed Kabba