IMF predicts 3.4% growth for Sub-Saharan Africa
The International Monetary Fund (IMF) has projected a stronger growth of 2.5 percent for Nigeria indicating a 1 percent increase from the 1.5 percent predicted in January 2021.
According to the IMF at the April 2021 World Economic Outlook (WEO) presented in Washington D.C on Tuesday, it stated that global economic recovery in 2021 is expected to grow by 6 percent and moderating to 4.4 percent in 2022.
The IMF chief economist, Gita Gopinath who presented the report stated that the global economic projection was coming after an estimated contraction of –3.3 percent in 2020 as the upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility.
“Thanks to unprecedented policy response, the COVID-19 recession is likely to leave smaller scars than the 2008 global financial crisis.”
The report said that the United States of America was expected to grow by 6.4 per cent and China by 8.4 per cent in 2021.
The report, however, said that emerging market economies and low-income developing countries had been hit harder and were expected to suffer more significant medium-term losses.
For Sub-Saharan Africa, growth was estimated at 3.4 per cent higher than the 0.2 percent predicted earlier with South Africa at 3.1 per cent.
The IMF said that there were divergent impacts with output losses particularly large for countries that relied on tourism and commodity exports and for those with limited policy space to respond.
It added that many of the countries entered the crisis in a precarious fiscal situation and with less capacity to mount major health care policy responses or support livelihoods.
According to the report, the projected recovery follows a severe contraction that has had particular adverse employment and earnings impacts on certain groups.
The IMF said youth, women, workers with relatively lower educational attainment and the informally employed had generally been hit hardest and income inequality was likely to increase significantly because of the pandemic.
“Close to 95 million more people are estimated to have fallen below the threshold of extreme poverty in 2020 compared with pre-pandemic projections.
“Moreover, learning losses have been more severe in low-income and developing countries, which have found it harder to cope with school closures and especially for girls and students from low-income households.
“Unequal setbacks to schooling could further amplify income inequality.”
Gopinath said that once the health crisis was over, policy efforts could focus more on building resilient, inclusive and greener economies, both to bolster the recovery and to raise potential output.
She also said that priorities should include investing in green infrastructure to help mitigate climate change, strengthen social assistance and social insurance to arrest rising inequality.
Also, introduce initiatives to boost productive capacity and adapt to a more digitalised economy and resolve debt overhangs.
She added that policymakers should continue to ensure adequate access to international liquidity.
According to Gopinath, major central banks should provide clear guidance on future actions with ample time to prepare to avoid taper-tantrum kinds of episodes as occurred in 2013.
“Low-income countries will benefit from further extending the temporary pause on debt repayments under the Debt Service Suspension Initiative and operationalising the G20 Common Framework for orderly debt restructuring.
“Emerging markets and low-income countries will benefit from a new allocation of the IMF’s special drawing rights and through pre-emptively availing themselves of the IMF’s precautionary financing lines, such as the Flexible Credit Line and the Short-Term Liquidity Line.
“Even while all eyes are on the pandemic, it is essential that progress be made on resolving trade and technology tensions.”
She also urged countries to cooperate on climate change mitigation, digitalisation, modernisation of international corporate taxation and on measures to limit cross-border profit shifting, tax avoidance and evasion.