Southern Africa is expected to experience an economic rebound in 2021 and 2022, provided the Covid-19 pandemic abates, according to a report released by the African Development Bank.
As elsewhere on the continent, the pandemic will be a deciding factor in the region’s economic fortunes. If all goes well, and that includes a successful vaccination campaign and health measures such as social distancing and wearing masks, Southern Africa is expected to grow by 3.2% in 2021 and 2.4% in 2022, according to the Bank’s Southern African Economic Outlook.
Those projections are a long way 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 managing director for the Southern Africa region, said the pandemic had left a deep impression among the 13 countries covered by the Southern African Economic Outlook.
“The magnitude of the socio-economic impact of the Covid-19 pandemic on the countries of southern Africa cannot be overstated – increasing poverty, inequality and unemployment, among other economic ailments,” said Mokaddem at the launch of the Southern African Economic Outlook last month.
Mokaddem told government officials, economists and partner representatives who attended the session: âDespite the current low infection rates, the situation remains fluid given the threats of new waves of Covid-19 and virulent variants. . ”
The pandemic-induced effects on production were most pronounced in countries heavily dependent on tourism, such as Botswana, Mauritius, Namibia and Zimbabwe. The same goes for countries that depend on commodity exports, Outlook pointed out.
Varied but positive growth prospects
Going forward, the lack of economic diversity could stifle the recovery. Commodities play an oversized role in many economies in the region, Bank analysts point out, citing Angola, Mozambique and Zambia as examples.
Dr Emmanuel Pinto Moreira, Director of the Bank’s Country Economics Department, said the region’s economic performance fits into the larger framework of Africa and the world as a whole. All regions of the continent except one, East Africa, recorded growth in 2020. Overall, Africa has experienced one of its worst recessions in decades.
“The good news is that there is a recovery and the outlook is positive … The very good news is that the three largest economies – Nigeria, South Africa and Egypt – are are recovering, âsaid Moreira, lead author of the report, a regional arm of the Bank’s African Economic Outlook.
Three factors are behind the recovery, Moreira said: a rebound in commodities, a recovery in tourism and sound policies.
The weak growth of South Africa – the region’s largest economy – has spilled over to its neighbors, who depend on the former for manufactured goods and as a market for their production inputs. Nonetheless, the report notes, regional inflation is expected to moderate from around 14.2% in 2020 to 9.4% in 2021 and 6.5% in 2022, improving growth prospects.
The region’s debt outlook is of moderate concern, as spending related to the pandemic drives up public spending. Gross government debt is expected to increase only moderately, predicts the Outlook.
Bank experts are proposing a number of short, medium and long term policies to restore Southern African economies to health. These include targeted support to severely affected sectors such as tourism, the removal of trade bottlenecks and the introduction of effective social protection programs.
In the report, the 13 countries that make up Southern Africa are: Angola, Botswana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Sao Tome and Principe, South Africa , eSwatini, Zambia and Zimbabwe.
Read the full report here.