Africa risks sliding into stagflation - a cycle of slow growth and high
inflation - as it battles the lingering effects of the pandemic and rising fuel
and food prices caused by the Ukraine conflict, the African Development Bank
(AfDB) said on Wednesday.
Despite experiencing relatively low death rates compared to more developed
regions, Africa was dealt a heavy economic blow by the COVID-19 pandemic.
While 2021 saw a continent-wide rebound, with gross domestic product (GDP)
growth estimated at 6.9% after a pandemic-induced contraction of 1.6% the
previous year, the Bank projects real GDP growth to slow to 4.1% this year.
"The deceleration in growth highlights the severity of the impact of the
Russia–Ukraine conflict on Africa's economy," the AfDB wrote in its 2022
African Economic Outlook.
"If the conflict persists, Africa's growth is likely to stagnate at around
4 percent in 2023."
Inflation is meanwhile expected to accelerate to 13.5% this year, from 13% in
2021, due to a sharp rise in energy and food prices linked to the war in
Ukraine.
The AfDB estimates around 30 million Africans were pushed into extreme poverty
and 22 million lost their jobs last year alone as a result of the pandemic.
Vulnerable populations, particularly in urban areas, will bear the brunt of
rising prices, the report said, adding that economic disruptions stemming from
the war could tip nearly 4 million more into extreme poverty this year and next.
"In the absence of measures to cushion the impact, this could stoke social
tension across the continent," the report stated. "But in many
African countries, fiscal space remains constrained by the effects of the
pandemic."
The AfDB forecasts Africa's debt-to-GDP ratio to stabilise at around 70%, down
slightly from 71.4% in 2020, due to last year's growth recovery and debt relief
measures, but will remain above pre-pandemic levels.
Source:
REUTERS