Fair and broad access to effective and safe Covid vaccines would be key to strengthening Africa’s economic recovery – World Bank
The World Bank expects South Africa to grow by 4.6% in 2021, an upward revision from its 3% April forecast and also a significant improvement on the bank’s 2.6% growth projection published in October last year.
“Growth in South Africa is projected to rebound from –6.4% in 2020 to 4.6% in 2021, supported by a favourable global environment and base effects,” the bank’s latest ‘Africa’s Pulse’ publication states.
The higher growth outlook is attributed to a “better performance in services, industry, and somewhat in agriculture”.
“The country provided stimulus to support businesses and households that were affected by the pandemic as well as by riots and lootings that mostly affected the KwaZulu-Natal and Gauteng provinces.”
The report warns, however, that the country is facing numerous challenges.
“The unemployment rate rose from 32.6% in 2021Q1 to 34.4% in 2021Q2, the highest level recorded since the publication of the Quarterly Labour Force Survey.
“In addition, rising debt levels are weighing on the government’s capacity to address social issues without jeopardising the sustainability of its public finances.
“Addressing electricity shortfalls, corruption in the ruling party, and pressing needs for reform in the labour and product markets remain priorities to push potential growth,” the bank says.
After a contraction of 2.0% in 2020, the World Bank expects real gross domestic product (GDP) in sub-Saharan Africa to grow by 3.3% in 2021 and 3.5% in 2022. The 2021 projection represents a one percentage point upward revision from the bank’s April forecast.
Chief economist for Africa Albert Zeufack said that fair and broad access to effective and safe Covid vaccines would be key to strengthening Africa’s economic recovery.
Faster vaccine deployment, he said, could accelerate the region’s growth to 5.1% in 2022 and 5.4% in 2023, as more containment measures would be lifted, boosting consumption and investment.
The October issue of ‘Africa’s Pulse’ also includes an analysis of the risks posed by climate change to Africa’s economic and social outlook.
Monthly economic activity in the region, the report warns, could contract by 1% when the average temperature is 0.5°C above that month’s 30-year average – a growth impact that is 1.6 times as high as that of developing countries outside the region.
It also includes simulations showing that the cost of doing nothing exceeds both the $30-billion to $50-billion yearly cost of adaptation investment and the losses associated with climate change.
“Recent simulations suggest that a 3°C global warming by 2100 (the “business as usual” scenario without major changes in the world’s social, economic, and technological trends) would entail estimated potential GDP losses of $2.9-trillion in sub-Saharan Africa.
“Implementing policies to reach the Paris Accord objectives (2°C global warming) would reduce the losses in economic activity by $962-billion a year in terms of the 2100 GDP.”
The bank, thus, urges African governments to place climate adaptation at the centre of economic policymaking and to seek to align economic activity with emerging green opportunities.
“Decarbonisation is an opportunity to foster manufacturing activity in the region, including the production of components of the Internet of Things, value-addition to minerals that will power the green economy, and insertion into regional value chains.”