Sub-Saharan Africa is set to grow by 3.7 percent in 2021 and 3.8 percent in 2022.
This rebound is most welcome and largely results from a sharp improvement in global trade and commodity prices.
Favorable harvests have also helped lift agricultural production
The outlook remains extremely uncertain, and risks are tilted to the downside.
In particular, the recovery depends on the path of the global pandemic and the regional vaccination effort, and is also vulnerable to disruptions in global activity and financial markets.
In this context, rising food price inflation, combined with reduced incomes, is threatening past gains in poverty reduction, health, and food security.
Over the next three decades, the global population is set to grow by about 2 billion people, with half of that increase in sub-Saharan Africa alone
Regionwide, social unrest and conflict increased significantly toward the middle of 2021, driven by legacies of armed conflicts; instability associated with political transitions; and high levels of unemployment, poverty, and inequality, all of which the pandemic has exacerbated further.
Conflict-related instability has taken an ongoing toll on the region, displacing populations, constraining policymaking, and eroding households’ ability to securely access key sources of food and income.
The number of internally displaced persons in sub-Saharan Africa has more than doubled over the past five years, reaching 16.5 million in 2020,
Portfolio inflows have turned positive. Inflows to emerging and frontier markets in sub-Saharan Africa totaled $4.4 billion between January and August 2021
Although foreign direct investment declined by 12 percent to $30 billion in 2020 (faring better than in other regions), it is expected to grow only modestly in 2021 and gain greater momentum beyond 2022
Remittances are expected to grow by 2.6 percent in 2021. The positive outlook comes on top of a better than-expected outcome in 2020.
Remittance flows fell by only 13.4 percent in 2020, driven by a dramatic fall of 28 percent in Nigeria.
Excluding Nigeria, the region’s remittances increased by 1.6 percent in 2020.
So far in 2021, some countries have already experienced huge spikes in remittance flows (for example, The Gambia by 60 percent and Kenya by 20 percent in the first half of 2021)
Looking at the region’s largest economies:
• South Africa is expected to grow by 5.0 percent in 2021, reflecting a better-than-expected growth in the first half of the year
However, the outlook has been weighed down by the combined impacts of the third wave of COVID-19 and localized social unrest in July.
With the pace of structural reforms expected to remain limited and the faster-than-expected rebound in 2021,
South Africa will be constrained in its ability to sustain the 2021 growth pace, so growth is expected to slow to 2.2 percent in 2022.
• Nigeria’s economy will grow by 2.6 percent in 2021, driven by recovery in non-oil sectors and higher oil prices, even though oil production is expected to remain below pre-COVID-19 levels.
Growth will inch up slightly to 2.7 percent in 2022 and remain at this level over the medium term, allowing GDP per capita to stabilize at current levels, notwithstanding long-standing structural problems and elevated uncertainties.
• Angola is expected to contract by −0.7 percent in 2021 and then grow by 2.4 percent in 2022, ending its six-year recession streak.
The 2021 growth has been revised downward significantly since April because of falling investments and recurring technical problems in the oil sector.
Non-oil growth will remain the main driver of economic growth, with commerce and agriculture having recovered strongly to above pre-pandemic levels.
• Ethiopia’s growth forecast for FY2021 remains unchanged at 2.0 percent, with growth in FY2022 facing headwinds from the slow pace of vaccination, a possible pickup in COVID-19 infections, and the Tigray conflict.
An improved external environment will support key exports and foreign direct investment and remittance inflows.
The ongoing conflict has increased the uncertainty around the country’s growth outlook.
Tourism-dependent countries (Cabo Verde, Comoros, The Gambia, Mauritius, São Tomé and Príncipe, Seychelles) face a particularly challenging recovery.
The pandemic has underscored the vulnerability of these economies to global shocks to travel and tourism, which represents about 18 percent of GDP on average.
Although growth has returned to pre-pandemic levels, these countries face permanent income losses as large as 15 percent of GDP (Cabo Verde, Mauritius).
Some countries have fared better because of significant remittance inflows (Comoros, The Gambia), which have supported private consumption.
Global tourism remains subdued. Nonetheless, from a low base, tourist receipts have started to improve
For countries within the region, the income loss because of the crisis is expected to vary significantly, ranging from a permanent loss of real output of more than 20 percent for Cabo Verde to less than 3 percent for Togo and Zimbabwe
Increasing debt vulnerabilities are a concern.
Despite the spending needs associated with the pandemic, most countries will nonetheless need to undertake fiscal consolidation to contain rising debt vulnerabilities.
Overall public debt levels are expected to improve slightly in 2021 to 56.6 percent of GDP, but this ratio remains elevated compared with a pre-pandemic level of 50.4 percent, and debt is still a concern in a significant number of countries.
In 2021, half of the region’s low-income developing economies (accounting for 25 percent of the region’s GDP and 28 percent of the region’s debt stock) are either in debt distress or at high risk of debt distress
; five countries—Angola, Cameroon, Ethiopia, Kenya, and South Africa—account for 60 percent of China’s outstanding loans to the region.