Economic growth in Africa will drop to 3.4% this year due to macroeconomic shocks —World Bank
The World Bank disclosed in the latest edition of its Africa Pulse report that the continent's economic growth will drop by 0.6% to 3.4% in 2022, down from 4% in 2021.
- Macroeconomic factors such as high inflation and rising cost of living are responsible for the projected decline.
- While the Democratic Republic of Congo and Zambia are expected to record the highest growth this year, Rwanda will record the steepest decline.
- The report said in view of the decline, it is unlikely that African countries will reduce poverty and achieve inclusive growth anytime soon.
The World Bank disclosed in the latest edition of its Africa Pulse report that the continent's economic growth will drop by 0.6% to 3.4% in 2022, down from 4% in 2021.
A copy of the report which was obtained by Business Insider Africa explained that this is due to macroeconomic shocks being faced by many African economies. Specifically, high inflation and rising cost of living are responsible for the expected decline.
Other threats faced by African economies include the adverse effects of the different variants of the Coronavirus, global supply chain strains, skyrocketing public debt across Africa, climate shocks and the general economic slowdown being experienced across the world, especially in some of the world's biggest economies.
"These challenges are compounded by Russia’s invasion of Ukraine, which has led to increasing international prices on commodities, particularly food staples, fertilizers, oil and gas. As global inflationary pressures increase, African economies are also faced with the likelihood that advanced economies will withdraw the policy stimulus deployed at the start of the pandemic," said a part of the report.
Note that while minerals-rich countries —the Democratic Republic of Congo and Zambia —are expected to record the highest growth this year by 4.8%, Rwanda will experience the steepest decline by 3.3%, the report said.
Meanwhile, in view of the general decline in Africa's economic growth this year, the World Bank concluded that it is unlikely the continent will be able to reduce poverty and achieve inclusive growth anytime soon. It therefore behooves of governments across Africa to come up with innovative policies aimed at providing temporary relief to Africans.
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“As African countries face continued uncertainty, supply disruptions and soaring food and fertiliser prices, trade policy can potentially play a key role by ensuring the free flow of food across borders... 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,” the World Bank's Chief Economist for Africa, Albert Zeufack, was quoted to have said.
Recall that this is one of many negative forecasts that have been made about Africa in recent months. For one, the International Monetary Fund recently projected that many countries in Sub Saharan Africa would experience worsened food crisis due to soaring global inflation.
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