Sub-Saharan Africa (PDF)

1 Output in Sub-Saharan Africa (SSA) is expected to expand a modest percent in 2021, and percent next year. Positive spillovers from strengthening global activity, better international control of COVID-19, and strong domestic activity in agricultural commodity exporters are expected to gradually help lift growth . Nonetheless, the recovery is envisioned to remain fragile, given the legacies of the pandemic and the slow pace of vaccinations in the region. In a region where tens of millions more people are estimated to have slipped into extreme poverty because of COVID-19, per capita income growth is set to remain feeble, averaging percent a year in 2021-22, reversing only a small part of last year's loss.

2 Risks to the outlook are tilted to the downside, and include lingering procurement and logistical impediments to vaccinations, further increases in food prices that could worsen food insecurity, rising internal tensions and conflicts, and deeper-than-expected long-term damage from the pandemic. Recent developments countries (IMF 2020). The adverse effects of the pandemic, fiscal pressures, and the very slow pace Output in Sub-Saharan Africa (SSA) collapsed by of vaccinations have dampened the resumption of an estimated percent in 2020 as a result of the growth , in particular in the hospitality and COVID-19 pandemic. This was the region's first tourism sectors.

3 economic contraction in a generation and the deepest recession since the 1960s. The recession Activity in the three largest economies in the was, however, milder than previously projected, as region Angola, Nigeria, and South Africa has the virus spread more slowly than anticipated and partially recovered after falling by percent in agricultural activity was unexpectedly strong in 2020. Many industrial and agricultural some countries (Benin, ethiopia , Kenya, Nigeria; commodity exporters suffered deep contractions World Bank 2021m). growth in the region has last year from depressed external demand and gradually resumed this year, reflecting positive localized COVID-related disruptions (Angola, spillovers from strengthening global economic Cabo Verde, Mali, Republic of Congo; FAO.)

4 Activity, including higher oil and metal prices, and 2020; World Bank 2021n). In tourism-reliant some progress at containing COVID-19 countries, international arrivals have been at a near outbreaks, especially in Western and Central -halt, and are likely to remain anemic until Africa (figure ). PMI readings for widescale vaccinations allow for a safe reopening manufacturing and services suggest that activity in of borders to international travel (Kenya, these sectors continued to expand in 2021, albeit Mauritius, Seychelles; figure ). Although at still modest rates (figure ). The conditions have improved in the region, COVID- pandemic has contributed to a widening of budget 19 and related control measures have continued to deficits and a sharp increase in government debt.

5 Disrupt schooling, damage health, inhibit The debt-to-GDP ratio in the region jumped on investment, and weigh on growth . average 8 percentage points to 70 percent of GDP. In countries with policy space, accommodative last year, raising the risk of debt distress in some monetary and fiscal policies, combined with currency depreciations and rising energy and food Note: This section was prepared by Cedric Okou. prices, have fueled inflationary pressures in some 94 CHAPTER G LO BAL EC O NO MIC P ROS P EC TS | J U NE 2021. FIGURE SSA: Recent developments remittances to the region a lifeline for household New COVID-19 infections in Sub-Saharan Africa (SSA) have declined after consumption have held up better than expected, rising sharply in late 2020 and early 2021.

6 Although PMI readings have partly reflecting a shift from informal or remained in expansionary territory this year, the resumption in activity has traditional non-digital cash payments to cheaper been tepid. International tourist arrivals have remained close to zero over the past year. As vaccinations proceed, some countries will gradually lift digital transfers and improving job opportunities travel restrictions. Inflation has picked up in some countries, reflecting in Sub-Saharan African migrant workers'. currency depreciations and rising food prices. destination countries. A. Daily new COVID-19 infections in B. Median purchasing managers SSA indexes for SSA countries Outlook Per 100,000 Per 100,000 Index 5 Eastern and Southern Africa 15 60 Composite New orders Sub-Saharan Africa West and Central Africa growth is expected to resume in SSA this year, 4 12.

7 EMDEs (RHS) 50. reaching percent, and firm to percent in 3 9. 2 6. 40 2022 (figure ). This pickup is underpinned 1 3 30 by stronger external demand from the region's 0 0 20. trading partners mainly China and the United Jan-20. Jul-20. Jan-21. Jul-19. Oct-19. Jan-20. Apr-20. Jul-20. Oct-20. Jan-21. Apr-21. States higher commodity prices, and better containment of COVID-19. Despite the projected rebound, SSA will have the second-slowest growth C. International tourist arrivals for D. Inflation selected SSA countries this year among emerging market and developing Percent Percent economy (EMDE) regions. Although some Index, 100 = January 2020.

8 150. Mauritius Kenya 25 2020 target 1000 countries have secured vaccine doses through the 2019 average 125 South Africa Seychelles 20 800. COVAX facility, procurement and logistical 100 15 600. challenges are envisioned to further delay the 75 10 400. 50 5 200. already slow pace of vaccination in the region 25 0 0 (figure ). Policy uncertainty and the 20Q3. 20Q4. 21Q1. 20Q3. 20Q4. 21Q1. 20Q3. 20Q4. 21Q1. 20Q3. 20Q4. 21Q1. 20Q3. 20Q4. 21Q1. 20Q3. 20Q4. 21Q1. 0. lingering negative effects of COVID-19 are also Jan-19. May-19. Jul-19. Sep-19. Nov-19. Jan-20. May-20. Jul-20. Sep-20. Nov-20. Jan-21. Mar-19. Mar-20. Mar-21.

9 AGO GHA KEN NGA ZAF ZWE. (RHS) expected to delay some major investments in infrastructure and the extractives sector, and to Sources: Haver Analytics; John Hopkins University; Seychelles National Statistics Agency; World weigh on the recovery (Central African Republic, Bank; Zimbabwe National Statistics. Note: EMDEs = emerging market and developing economies; SSA = Sub-Saharan Africa . Equatorial Guinea, Kenya, Niger). The regional A. Figure shows 7-day moving average of new COVID-19 cases. EMDEs line indicates the 7-day moving average ending on May 25, 2021. forecast has been downgraded by an average B. Composite PMI covers manufacturing and services.

10 Sample includes Ghana, Kenya, Mozambique, percentage point in 2021-22 below the January Nigeria, South Africa , Uganda, and Zambia. Last observation is April 2021. C. Figure shows changes in tourist arrivals indexed to January 2020 = 100. projections, mainly reflecting worse-than-expected D. AGO = Angola; GHA = Ghana; KEN = Kenya; NGA = Nigeria; ZAF = South Africa ; ZWE =. Zimbabwe. Latest observation is 2021Q1. Orange lines show 2020 inflation targets for Ghana, Kenya, weakness in investment, recurring bouts of Nigeria, and South Africa . conflict, and limited policy space to further support demand. Activity over the forecast horizon is now set to expand by percentage point less than the average pace of 2010-19.