The International Monetary Fund (IMF) has projected that sub-Saharan Africa’s GDP will contract by 1.6% in 2020, it said in its Sub-Saharan Africa Regional Economic Outlook released on Wednesday. The decline will be the lowest level of growth on record for the region.
These expectations come in at roughly 5.2% points lower than envisaged in the October 2019 Regional Economic Outlook for Sub-Saharan Africa, the report added. It also highlighted that the sharp downward revision largely reflects the fallout from the ongoing coronavirus outbreak and lower-than-expected commodity prices.
Idiosyncratic factors, such as South Africa’s continued structural constraints, policy adjustments in Ethiopia, and climactic and other natural shocks such as east Africa’s recent locust invasion have also contributed to the downward revisions.
The region’s growth projection is subject to unusually large uncertainty due to the economic fallout dependent on several factors that are hard to predict, the report said.
“These include how the pandemic interacts with weak local health systems and existing health vulnerabilities, the effectiveness of containment efforts and the risk of the virus outbreak continuing beyond the second quarter (Q2) of 2020, the impact of trade disruptions including closure of key ports (Southern African Customs Union countries), and uncertainty regarding the outlook of oil prices,” mentioned the report.
A more protracted outbreak will lead to a deeper global contraction in 2020 and a shallower recovery and lower commodity prices. There will also be tighter financial conditions than in the baseline, which could result in regional growth falling by an additional 2.5% points.