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COVID-19 plunges SSA into first recession in 25 years
The World Bank has confirmed the economic downturn in Sub-Saharan Africa, with COVID-19 pushing the region into its first recession in 25 years. With the toll that the pandemic has taken on economic activity, growth is projected to fall to negative 3.3 per cent this year. The heavy blow could also erase at least five years of progress in fighting poverty. Joining CNBC Africa to unpack the latest report from the World Bank is Albert Zeufack, Chief Economist for Africa at the World Bank.
Fri, 09 Oct 2020 08:23:58 GMT
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AI Generated Summary
- The World Bank projects a 3.3% contraction in Sub-Saharan Africa in 2020, marking the region's first recession in 25 years and erasing years of progress in poverty alleviation.
- Sound economic policies, short-term measures like debt relief and governance reforms, and long-term investments in job creation and digital infrastructure are crucial for recovery.
- South Africa faces a deep economic decline, highlighting the importance of sectoral reforms, infrastructure investments, and green growth initiatives for sustainable revival.
Sub-Saharan Africa is grappling with the economic fallout of the COVID-19 pandemic, as the World Bank projects the region will contract by 3.3% in 2020, plunging it into its first recession in 25 years. This severe contraction comes amidst a global health crisis that has not been as devastating as initially predicted but is still causing significant economic damage. The pandemic's toll on economic activity is projected to erase at least five years of progress in fighting poverty in the region. Albert Zeufack, Chief Economist for Africa at the World Bank, joined CNBC Africa to discuss the latest report and outline the challenges and potential paths to recovery for Sub-Saharan Africa. Zeufack emphasized the critical need for sound economic policies to pave the way for recovery. Short-term measures include rebuilding fiscal space, implementing reforms to improve governance and efficiency, and securing international support for debt relief. Long-term investments in job creation, digital infrastructure, value addition in exports, and boosting agricultural productivity are essential for sustainable and inclusive recovery. South Africa, one of the hardest-hit countries in the region, is facing a deep economic contraction due to the pandemic. The government has implemented lockdowns and confinement measures, but the economy continues to suffer. Zeufack highlighted the importance of reforms in the electricity sector, investment in infrastructure, and creating a more conducive investment climate to drive recovery efforts. He stressed the potential for green growth and reducing emissions as key opportunities for South Africa's economic revival. Financing the recovery poses a significant challenge, with the private sector's balance sheets constrained and international support crucial for mitigating the economic impact of COVID-19. Zeufack underlined the importance of addressing debt issues comprehensively, improving spending efficiency, and garnering support from the international community to bolster fiscal resilience. Despite the challenges, Zeufack acknowledged some upside risks to the growth forecast, such as the digital revolution gaining momentum in Africa and increased intra-Africa trade. However, downside risks remain prominent, including a second wave of infections in major trading partners, low remittances, and a decline in tourism revenue. The road to recovery for Sub-Saharan Africa will be long and arduous, requiring a multi-faceted approach that addresses both immediate needs and long-term sustainable growth strategies.
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