2021: Africa records 6.1% growth in GDP amid Covid impacts
Africa’s Gross Domestic Product [GDP] grew by an estimated 6.9% in 2021, a strong recovery from the pandemic-induced contraction of 1.6% percent in 2020.
The rebound, according to the African Development Bank [AfDB] was attributed to recovery in oil prices and global demand, combined with the resurgence in household consumption and investment in most countries after restrictions over the Covid pandemic were eased.
Growth in the continent’s GDP per the Bank’s Africa Economic Performance and 0utook report, was highest in North Africa (11.7 percent) and East Africa (4.8 percent).
In North Africa, growth was buoyed by the easing of political tensions in Libya and the attendant lifting of oil exports blockade in late 2020, which, coupled with a positive oil price shock, was reflected in unexpected large base effect expansion in the country’s GDP (177.3 percent).
Southern Africa’s estimated growth of 4.2 percent represented the largest recovery, from a contraction of 6%, underpinned by strong recovery in Botswana (12.5 percent), Zimbabwe (6.3 percent), and South Africa (4.9 percent).
According to the AfDB, macroeconomic fundamentals of African countries, have generally improved, but considerable challenges remain in the medium term, due largely to the persistence of the pandemic effect and volatility induced by the impact of the Russia–Ukraine conflict.
Africa’s fiscal deficit is projected to narrow to 4.0 percent of GDP in 2022, from 5.1 percent in 2021, reflecting scaling-down of COVID-19-related interventions and strengthening of domestic revenues.
The current account deficit is projected to be 2 percent of GDP in 2022, down from 2.4 percent in 2021, underpinned by the expected narrowing of the trade deficit and current transfers.
Additionally, exchange rate fluctuations fell in most countries in 2021, supported by higher foreign exchange inflows. The path on exchange rate dynamics in 2022 and beyond depends on developments in international financial markets, especially on the back of the Russia–Ukraine conflict.
Average inflation on the Continent, is projected to accelerate to 13.5 percent in 2022, from 13 percent in 2021, as Russia’s invasion of Ukraine stokes a sharp rise in commodity prices, especially for energy and food.
The AfDB in the report, asserts that Africa’s low vaccination rates are constraining the continent’s faster economic recovery from the pandemic, thereby further increasing the health and economic impact of COVID-19.
“Improving vaccination rates is key to reducing infections and mortality and quickening the pace of economic recovery,” said the AfDB.
According to the Bank, a policy mix to speed up vaccine access and rollout, address debt vulnerabilities (through reconfigured and enhanced global mechanisms) and climate change effects, and support vulnerable households and firms, remains critical to boosting the post-COVID-19 economic recovery of African economies.
