Sub-Saharan Africa GDP to contract 3.1% this year

PUBLISHED: Fri, 24 Jul 2020 15:15:38 GMT

JOHANNESBURG (Reuters) – Sub-Saharan Africa’s economy will contract this year after shutdowns disrupted activity and as daily cases of coronavirus are still rising in the region but a recovery is expected next year, a Reuters poll found on Friday.

Following months of lockdowns which have muted economic activity a Reuters poll taken in the past week suggested the region will contract 3.1% this year but bounce back to around 3.5% growth in 2021.

Some countries have begun relaxing restrictions but virus cases are still increasing, unlike in many developed countries that have started to show signs of recovery, so the uncertainty meant the range of forecasts for next year was wide – between flatlining and 4.8% growth.

South Africa has reported the most cases in Africa, partly reflecting more widespread testing, and it is harder to gauge the full extent of outbreaks elsewhere although there are no signs numbers are falling.

“Growth downgrades dominate in a region where external and fiscal buffers were already substantially eroded. The impact of COVID-19 will reduce growth even further,” Standard Chartered wrote in a note.

Nigeria, Africa’s biggest economy, was expected to contract 3.7% this year but bounce back to 2.0% growth next year.

Continental peer South Africa was expected to grow 3.5% next year following an 8.0% contraction this year, a Reuters poll showed last week.

However, Ghana, one of the continents oil exporters, was still expected to grow, expanding 1.9% this year and 4.2% in 2021.

“Despite the obvious downside risks from lower oil prices and headwinds from COVID-19, we believe Ghana has a decent growth outlook and reasonably comfortable external sector metrics relative to other African oil exporters,” said Michael Kafe, economist at Barclays.

“The fallout from COVID-19 and associated lockdown means GDP growth is likely to be weak this year. However, unlike other African oil exporters such as Angola, Gabon and Nigeria, where GDP growth is likely to contract this year, we expect Ghana to post positive GDP growth.”

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