Coronavirus pandemic set off 1st recession in Sub-Saharan Africa in 25 years, says World Bank
The coronavirus pandemic has “set off the first recession in the Sub-Saharan Africa region in 25 years,” the World Bank said on Thursday.
The latest Africa’s Pulse the World Bank’s biannual analysis of the state of the region’s economies estimates the deadly pandemic “could cost the region between $37 billion and $79 billion in terms of output losses for 2020.”
“The impact on household welfare is expected to be equally dramatic with welfare losses in the optimistic scenario projected to reach 7% in 2020, compared to a non-pandemic scenario,” the report predicted.
The bank also forecast the growth at -5.1% in 2020 from a modest 2.4% in 2019, the report said.
It stressed the urgent need for “temporary official bilateral debt relief to help combat the pandemic while preserving macroeconomic stability in the region.
“Due to deteriorating fiscal positions and increased public debt, governments in the region do not have much room for wiggle in deploying fiscal policy to address the COVID-19 crisis,” Albert Zeufack, chief economist for Africa at the World Bank, was quoted as saying in the report.
“Short-term fiscal policy should aim at redirecting government expenditure to increase the capacity of the health system to protect and equip the already scarce the medical personnel, and to provide adequate and affordable medical attention to the people affected by COVID-19 pandemic,” Cesar Calderon, World Bank’s lead economist and lead author of the report, was quoted as voicing.
“But at this time it is also important to consider that most workers in the region are engaged in the large informal sector where they lack benefits such as health insurance, unemployment insurance, and paid leave,” he said.
“They usually need to work every day to earn their living and pay for their basic household necessities. A prolonged lockdown would put their basic survival at great risk,” he added.
The report also urged policymakers in Africa to search for and think about an exit strategy from the deadly pandemic.
“Once the containment and mitigating measures are lifted, economic policies should be geared towards building future resilience,” the report said.
“Economies still need to design policy pathways to achieve sustainable growth, economic diversification and inclusion,” it added.
After first being detected in the Chinese city of Wuhan in December, the virus has spread to at least 184 countries and regions.
The number of confirmed cases worldwide has surpassed 1.5 million with over 87,900 deaths and more than 318,000 recoveries, according to U.S.-based Johns Hopkins University.