World Bank lowers sub-Saharan Africa growth projection to 3.6%

The World Bank has cut Sub-Saharan Africa’s 2022 growth estimates from the 4% in 2021 to 3.6%, as the region continues to deal with new COVID-19 variants, global inflation, supply disruptions, climate shocks and the effects of the Russian invasion of Ukraine.

This was contained in the Bank’s Africa’s Pulse, a biannual analysis of the near-term regional macroeconomic outlook.

The Pulse said:  “Adding to the region’s growth challenges are rising global commodity prices, which are increasing at a faster pace since the onset of the conflict between Russia and the Ukraine.

“As top world exporters of food staples, Russia, the world’s largest exporter of fertilizers, and Ukraine account for a substantial share of wheat, corn and seed oil imports, all of which may be halted if the conflict persists.

“While sub-Saharan economies are also likely to be impacted by tightening of global conditions and reduced foreign financial flows into the region, the analysis notes that the high fuel and food prices will translate into higher inflation across African countries, hurting poor and vulnerable citizens, especially those living in urban areas.

“One point of concern is the increased likelihood of civil strife as a result of food and energy-fuelled inflation, particularly in this current environment of heightened political instability.”

The report quoted World Bank’s Chief Economist for Africa, Albert Zeufack, as saying:  “As African countries face continued uncertainty, supply disruptions and soaring food and fertilizer prices, trade policy can potentially play a key role by ensuring the free flow of food across borders throughout the region.

“Amid limited fiscal space, policymakers must look to innovative solutions such as reducing or waving import duties on staple foods temporarily to provide relief to their citizens.”

One point of concern is the increased likelihood of civil strife as a result of food and energy-fuelled inflation, particularly in this current environment of heightened political instability.

Uneven recovery

The analysis noted that recovery remained uneven, incomplete and is happening at varied rates of speed across the region.

Of the region’s three largest economies—Angola, Nigeria, and South Africa—growth in South Africa is expected to decline by 2.8% in 2022, dragged by persistent structural constraints.

Angola and Nigeria are expected to continue their growth momentum in 2022, up by 2.7 and 0.2% respectively, partly supported by higher oil prices and good performance in the non-oil sector.

Resource-rich countries, especially their extractive sectors, will see improved economic performance due to the war in Ukraine, while non-resource rich countries will experience a deceleration in economic activity.

Excluding Angola, Nigeria and South Africa, regional growth is projected at 4.1 in 2022, and 4.9% in 2023.

The report also highlights the importance of expanding social protection programs beyond safety nets to strengthen economic resilience and responsiveness to shocks, particularly for poor and vulnerable households.

Recommendations include developing social insurance, savings and labour market programs that contribute to economic resilience by protecting urban informal workers and help the population invest in their health and education.

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