Post COVID-19: AfDB projects Africa’s growth stands to rebound to 3% in 2021

African Development Bank has projected that Africa’s growth stands to rebound to 3% in 2021 African Economic Outlook 2020 Supplement

While disclosing this on Tuesday July 7, 2020, AfDB stated that the projection is possible provided that governments manage the COVID-19 infection rate well.

In a comprehensive socio-economic assessment of the pandemic’s impact, the bank said growth was projected to rebound to 3% in 2021 from -3.4% in the worst-case scenario for 2020.

The predictions are contained in a supplement to the Bank’s African Economic Outlook, which was released on 30 January. At the time, Africa’s growth was forecast at 3.9% in 2020 and 4.1% in 2021.

The supplement cautioned that the growth outlook for 2021 and beyond would depend largely on African governments’ effectiveness in flattening the curve of the outbreak and policies to reopen economies.

Charles Leyeka Lufumpa, Acting Chief Economist and Vice President for Economic Governance and Knowledge Management, at the African Development Bank, said, “To reopen economies, policymakers needed to follow a phased and incremental approach that carefully evaluates the trade-offs between restarting economic activity too quickly and safeguarding the health of the population.”

“Economic activities can be restarted incrementally on the basis of the transmission risks of different sectors,” Lufumpa said.

The spread of the virus in Africa depends largely on the preparedness of countries to separate and treat infected patients, the supplement stated, noting that only 21 out of 54 African countries are clinically prepared to deal with epidemics.

Executive Director of the African Economic Research Consortium and Former Governor of the Central Bank of Kenya, Njuguna Ndung’u described the African Economic Outlook 2020 supplement as “a very important and useful policy tool for African countries who actually need it at this time.”

“It will be useful now and in the future. It gives us important short, medium- and long-term strategies,” he added, stressing that crises like COVID-19 present a good opportunity for innovative reforms in countries.

The supplement noted that the curve of the pandemic in Africa was flattening gradually. However, COVID-19 remains a serious threat to lives and livelihoods, given weak healthcare systems and limited social protection.

The continent also remains vulnerable to other regional threats such as the locust swarms that have struck East Africa, as well as to extreme climate events.

Under projected scenarios for contraction of growth, Africa could lose between $145.5 billion and $189.7 billion of GDP in 2020, according to the publication.

Hanan Morsy, Director of the Macroeconomic Policy, Forecasting and Research Department at the African Development Bank, said, “The African Economic Outlook 2020 Supplement shows that for the first time in the last half-century, Africa would be facing an economic recession as a fallout of the COVID-19 pandemic.

“This would affect the gains achieved in poverty reduction as an estimated 49 million Africans could be pushed into poverty, with about 30 million jobs at the verge of disappearing.

“Policymakers need to act fast to alleviate the impact of the crisis on vulnerable groups through well targeted social safety net measures.”