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Daily Briefing: Sub-Saharan Africa Faces First Recession in 25 Years- World Bank

As Sub-Saharan African countries continue to face economic uncertainty in the time of COVID-19, the region’s latest macroeconomic analysis says governments can look to policy reform as a driver of economic recovery.

A World Bank report has confirmed that economic activity will decline by 3,3% in 2020. Covid-19 threatens to push up to 40 million people into extreme poverty in Africa, eroding many of the development gains of the past decade. The analysis recommends governments seize the opportunity within the crisis to develop policies and prioritize investments that build greater resilience, boost productivity and generate jobs.

The pandemic could also drive up to 40 million people into extreme poverty in Africa in 2020, erasing at least five years of progress in fighting poverty.

With over a million reported COVID cases across the continent, the pandemic is still not under control in Sub-Saharan Africa. Some governments, notably Senegal and Mauritius, have acted rapidly to reduce the spread of infections; however successful containment measures come with a high economic cost, as has been seen across the globe.

In contrast, for non-resource-intensive countries, the decline in growth in 2020 is expected to be moderate, on average. In several non-resource-intensive countries, including Côte d’Ivoire, Ethiopia, and Kenya, growth is expected to slow substantially, but remain positive, owing to their more diversified economies. Meanwhile, the tourism-dependent economies, especially those of Cabo Verde, Mauritius and the Seychelles, experienced a sharp contraction as exceptionally weak international tourism severely impacted the service sector.

The substantial downturn in economic activity will cost the region at least $115 million in output losses this year. Gross domestic product per capita growth is expected to contract by nearly 6.0 percent, in part caused by lower domestic consumption and investment brought on by containment measures to slow the spread of the coronavirus.

Economic Impact of COVID-19 in Sub-Saharan Africa

Several countries, including South Africa, Nigeria, and Ethiopia, have already begun implementing long-needed reforms in energy and telecommunications spurred by the current crisis, and 25 percent of African firms have accelerated the use of digital technology and increased investments in digital solutions. By mid-September, 46 countries in Sub-Saharan Africa had put in place 166 social protection measures with social assistance representing 84 percent of these measures. Social protection programs have proven to be a critical tool to mitigate the social impact of the pandemic.

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