This is according to data released by the IMF in a revised Regional Economic Outlook (REO) forecast for 2020.
The IMF said that the earlier projected effect could be worse as the Sub Saharan Africa economy is predicted to contract by 3.2% in 2020, which is 1.6 percentage points deeper than the projection in April 2020.
A statement issued by the IMF explained that the decline is also a reflection of a weaker external outlook as global growth is also projected at –4.9% in 2020. This is a 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast.
“The outlook for 2020–21 is considerably worse than expected in April and subject to much uncertainty. It reflects a weaker external environment and measures to contain the COVID-19 outbreak, which has been accelerating in the past few weeks in several sub-Saharan African countries. Economic activity this year is now projected to contract by some 3.2 percent, markedly worse than the 1.6 percent contraction anticipated in April,” the statement noted.
However, “growth is projected to recover to 3.4 percent in 2021 subject to the continued gradual easing of restrictions that has started in recent weeks and, importantly, if the region avoids the same epidemic dynamics that have played out elsewhere.”
Reaching the continent through travelers returning from hotspots in Asia, Europe, and the United States, Africa’s first COVID-19 case was recorded in Egypt on 14 February 2020.
Africa has recorded over 400,000 cases. The increase in cases caused most governments to implement measures to curb the spread of the virus.
This reduced economic activities. Some companies dismissed their workers, others are being paid half their initial salary before the COVID-19 pandemic.
The novel coronavirus has reduced agricultural productivity, caused businesses to shut down temporarily and restricted travels.
The number of cases in Africa is currently over 400,000 of which over 60% were detected in Ghana, Nigeria, and South Africa.
Many countries have started easing restrictions but the IMF further explains that “the easing of containment measures could lead to an even quicker acceleration in infections, with potentially devastating effects on health systems and the population. Even if sub-Saharan African countries avoid new lockdowns, slower global growth could weigh on activity through trade and financial links, and financial market dislocations could add to the stress. Moreover, a persistent slowdown in international tourism could weigh on the recovery in services-dependent economies.”
“Oil exporting countries saw their growth revised down by 2 percentage points on average and other commodity exporters’ by 1½ percentage points. Growth in non-resource intensive countries is expected to come to a near standstill. All but two countries are set to experience falls in real per capita income, ranging between 0.1 and 15 percent. On average, per capita incomes across the region will fall by 7 percent relative to expected levels back in October 2019 and close to levels seen nearly a decade ago,” the statement added.
However, it said that regional policies will remain focused on public health, supporting people and businesses affected by the pandemic, and helping see a rebound in 2021.