COVID-19 drives Sub-Saharan Africa toward first recession in 25 years

Growth in Sub-Saharan Africa has been significantly impacted by the ongoing coronavirus outbreak and is forecast to fall sharply from 2.4% in 2019 to -2.1 to -5.1% in 2020, the first recession in the region over the past 25 years, according to the latest Africa’s Pulse, the World Bank’s twice-yearly economic update for the region. 

The analysis shows that COVID-19 will cost the region between $37 billion and $79 billion in output losses for 2020 due to a combination of effects. They include trade and value chain disruption, which impacts commodity exporters and countries with strong value chain participation; reduced foreign financing flows from remittances, tourism, foreign direct investment, foreign aid, combined with capital flight; and through direct impacts on health systems, and disruptions caused by containment measures and the public response. 

While most countries in the region have been affected to different degrees by the pandemic, real gross domestic product growth is projected to fall sharply, particularly in the region’s three largest economies – Nigeria, Angola, and South Africa— as a result of persistently weak growth and investment. 

In general, oil exporting-countries will also be hard-hit; while growth is also expected to weaken substantially in the two fastest growing areas — the West African Economic and Monetary Union and the East African Community — due to weak external demand, disruptions to supply chains and domestic production.