Opening Remarks at the Press Briefing on the Regional Economic Outlook for Sub-Saharan Africa

IMF News, October 21, 2021

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Opening Remarks at the Press Briefing on the Regional Economic Outlook for Sub-Saharan Africa

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• Published: October 21, 2021

Pandemic dynamics and vaccine rollout

• The pandemic has produced "two worlds": robust recoveries in most advanced economies with plentiful vaccine supply, and slower recoveries in vulnerable emerging and developing economies with limited policy space and slower vaccine rollout.
• Since the April 2021 Regional Economic Outlook, sub‑Saharan Africa has been hit by a third wave driven by the more contagious Delta variant, with infection rates "often rising to triple or quadruple what they were in January."
• That wave has eased over the past month, but repeated waves are likely going forward.
• Vaccination constraints:
  • "Only around 3 percent of the population in sub-Saharan Africa have been fully vaccinated."
  • Contrast: "most advanced and many EM countries that are close to the 60 percent or more level of vaccination."
  • Causes cited: stockpiling by advanced economies, export restrictions by major vaccine manufacturing countries, and demands for booster shots in advanced economies.
• Lockdowns remain the primary containment tool where vaccines are limited; recent lockdowns have been less severe than early-pandemic measures but their cumulative impact on economic activity and confidence is significant.

Economic outlook and key statistics

• Growth projections:
  • "sub‑Saharan Africa’s economy will grow by 3.7 percent in 2021 and 3.8 in 2022."
• Recovery characteristics:
  • The recovery is supported by favorable external conditions on trade and commodity prices, improved harvests, and increased agricultural production in a number of countries.
  • The 2021–22 recovery follows the sharp contraction in 2020 but remains the slowest relative to other regions.
  • Advanced economies are projected to return to their precrisis path by 2023, while "the pandemic looks to have durably lowered the path of real GDP in sub-Saharan Africa, suggesting a loss of real per capita output of close to 5½ percent relative to the pre-crisis path."
• Drivers of divergence: slow vaccine rollout and stark differences in policy space between sub‑Saharan Africa and advanced economies.

Major challenges and policy priorities

• Inequality and poverty:
  • The pandemic has pushed "some 30 million people back into extreme poverty" and worsened inequality across income groups and subnational regions.
  • Rising food (and fuel) prices threaten to further erode gains in poverty reduction, health outcomes, and food security.
  • Policy imperative: "Policies need to be squarely focused on addressing this challenge."
• The policy trilemma for African policymakers:
  • Pressing spending needs to address social, human capital, and infrastructure gaps;
  • Limited borrowing capacity given already high public debt levels in most cases;
  • The time consuming and politically difficult nature of mobilizing tax revenues.
  • How deftly countries navigate this trilemma will significantly affect macroeconomic wellbeing and growth prospects.
• International solidarity and financing:
  • Divergent health, poverty, and economic outcomes underscore the "critical importance of international solidarity and support."
  • IMF vaccination goals: "to vaccinate at least 40 percent of the total population of all countries by the end of 2021 and 70 percent by the first half of 2022."
  • For sub‑Saharan Africa these goals are "ambitious and will require a marked change in strategy by both advanced economies and sub‑Saharan African countries."
  • "Significant external concessional financing is needed to limit and eventually close the divergent recovery paths" and prevent divergence from hardening into permanent fault lines.
  • Need for nimble and effective debt restructuring mechanisms "to avoid the burden of adjustment falling on the poor and facilitate quicker economic recovery."

IMF actions and regional opportunity

• IMF support:
  • The recent general SDR allocation has "boosted the region’s reserves, easing some of the burden on authorities as they guide their countries’ recovery."
  • Ongoing efforts to re-channel SDRs from countries with strong external positions to countries with weaker fundamentals to bolster regional resilience.
• Demographic opportunity:
  • Over the next three decades, the global population is set to grow "by about 2 billion people, with half of that increase coming from sub‑Saharan Africa."
  • This presents an opportunity: "a growing pool of human talent and ingenuity" with a potentially telling effect on global economic, social, and political trajectories.

Opening Remarks at the Press Briefing on the Regional Economic Outlook for Sub-Saharan Africa by Abebe Aemro Selassie, Director, African Department, IMF, October 21, 2021

References

• Abebe Aemro Selassie
• Speeches
• PRESS CENTER
• https://www.imf.org/en/home