April 15, 2021

Africa suffers rare GDP drop on pandemic fallout

by Fathom Consulting.

Economic growth in sub-Saharan Africa fell below zero for the first time in more than a quarter of a century in 2020. Official COVID-19 case and mortality figures have been relatively low in Africa. However, even with less severe health outcomes and looser restrictions on economic activity, many countries on the continent have suffered from weak international demand and its consequent impact on commodities prices, while tourist-reliant economies have also fared poorly. Meanwhile, reduced fiscal space has meant that governments have been unable to support households and businesses as much as in the advanced economies. As a result, there is likely to be less of a boost from excess savings this year. That fact seems especially true as vaccine rollouts across most of the continent continue to lag that in rich countries, meaning health risks will probably linger for longer. As a result, forecast GDP growth for 2021 shows sub-Saharan Africa lagging the G7 group of industrialised nations for only the second time since the turn of the millennium. What has become a customary growth gap is expected to return in the medium term as the effects from the pandemic wane.

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