International Monetary Fund predicts 3.2% economic contraction amid rising poverty
The Covid-19 pandemic continues to represent an unprecedented health and economic crisis, with costs that will be felt most keenly by the poorest segments of the world’s population, the International Monetary Fund (IMF) said in its latest Regional Economic Outlook for Sub-Saharan Africa.
Highlights of the outlook include:
- The regional outlook has deteriorated sharply since the April 2020 Regional Economic Outlook report release. Sub-Saharan Africa’s economy is now expected to contract by 3.2 percent in 2020; double the contraction expected in April.
- This will contribute to poverty increase this year.
- The growth rate of new Covid-19 infections has slowed somewhat, allowing some countries to gradually ease their containment measures. However, the scope for the pandemic to spread as aggressively as elsewhere remains a very real threat.
- Governments have acted swiftly to support the economy. Nonetheless, these efforts have been constrained by falling revenues and limited fiscal space.
- Africa’s resilience is being tested. The continent has come through much and will come through this crisis also. But with stepped-up support from the international community, the region will be able to boost local containment efforts and healthcare capacity and also enjoy a robust recovery in the coming months.
‘This is a fast-moving crisis,’ said Abebe Aemro Selassie, Director of the IMF’s African Department. ‘And recent developments suggest that the downturn will be significantly larger than we had anticipated only 10 weeks ago.
'The risks we highlighted in April all continue to be a concern, but the deterioration of the global outlook has been particularly striking. In line with this new outlook, and consistent with local high-frequency indicators, output in Sub-Saharan Africa is now projected to shrink by 3.2 percent this year, more than double the contraction we had outlined in April. Again, this is set to be the worst outcome on record.’