Southern Africa set for economic rebound, COVID-19 impact lingers

AdobeStock 362082211Southern Africa is set for an economic rebound in 2021 and 2022, provided the COVID-19 pandemic tapers off, according to African Development Bank (AfDB)

If all goes well, and that includes a successful vaccination campaign and health measures such as social distancing and wearing masks, Southern Africa is projected to grow 3.2% in 2021 and 2.4% in 2022, according to the bank’s Southern Africa Economic Outlook. These projections are a far cry from 2020, when the region suffered a 6.3% contraction - by far the worst in Africa. Central Africa experienced the second-worst regional economic contraction at 2.6%.

Leila Mokaddem, the bank’s director general of the Southern Africa Region, said that the pandemic had left a deep impression among the 13 nations covered by the Southern Africa Economic Outlook. “The magnitude of the socioeconomic impact of the COVID-19 pandemic on countries in Southern Africa cannot be overemphasised - rising poverty, inequality and unemployment, among other economic malaise,” Mokaddem said at the launch of the Southern Africa Economic Outlook last month.

Pandemic-induced effects on output were more pronounced in countries that strongly depend on tourism, such as Botswana, Mauritius, Namibia, and Zimbabwe. The same was true for countries that rely on commodity exports, the Outlook pointed out. Going forward, lack of economic diversity could stifle the recovery. Commodities play an oversized role in many of the region’s economies, the Bank’s analysts point out, citing Angola, Mozambique and Zambia as examples.

“The good news is that there’s a recovery and the outlook is positive. The very good news is that the three largest economies - Nigeria, South Africa, and Egypt are recovering,” said Moreira, lead author of the report, a regional offshoot of the bank’s African Economic Outlook.

Slow growth in South Africa, the region’s largest economy, has spilled over into its neighbours, which rely on the former for manufactured goods and as a market for their production inputs. The report notes, regional inflation is expected to moderate from an estimated 14.2% in 2020 to 9.4% in 2021 and 6.5% in 2022, improving growth prospects.

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