Presenter: Dr. Chuku Chuku,OIC Manager, ECMR1Tokyo, September 14, 2020

OUTLINE OF THE MAIN REPORTSECTION 1

MACROECONOMIC PERFORMANCE AND PROSPECTS

SECTION 2

SOCIO-ECONOMIC IMPACTS OF COVID–19 ON AFRICASECTION 3

POLICY OPTIONS2SECTION 1
MACROECONOMIC PERFORMANCEAND PROSPECTSCOVID–19 HAS REVERSED AFRICA’S STRONG GROWTH TRAJECTORY• Under the baseline scenario, real GDPin Africa is projected to contract by 1.7
percent in 2020.

Africa is projected to fall into a recession in 2020

• In the worst-case scenario, GDP couldfall by –3.4 percent in 2020.
• Partial recovery of about 3 percent is
projected for 2021.

Source: African Development Bank statistics

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THE IMPACT OF COVID-19 AND PROSPECTS FOR RECOVERY VARIES ACROSSREGIONS AND ECONOMIES
Tourism-dependent economies and oil-exporters would
suffer more losses than non-resource-intensive economies

East Africa would be the most resilient, while Southern
Africa could be the hardest hit in 2020

Source: African Development Bank statistics.

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MACROECONOMIC FUNDAMENTALS ARE DETERIORATING
Currency depreciations have been sharper in frontier economies• Inflation has quickly increased in
the continent because of supply
chain disruptions—up to 5 pp
more in some countries• Exchange rates have fluctuatedwidely, especially for frontiereconomies as a result of capitaloutflows.
Source: African Development Bank statistics.

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FISCAL DEFICITS AND DEBT LEVELS ARE RISING
Fiscal deficits are projected to at least double in 2020…

…while debt-to-GDP ratios are projected toincrease further by up to 10pp

Source: African Development Bank statistics.

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EXTERNAL POSITIONS ARE EXPECTED TO WORSEN SIGNIFICANTLY DURING THE
CRISIS
Africa’s current account is expected toworsen to 8.1 percent of GDP in 2020

Foreign direct investment and remittances flows will bedisrupted

Source: African Development Bank statistics.

8SECTION 2
SOCIO-ECONOMIC IMPACTS OF
COVID–19 ON AFRICA

ALTHOUGH COVID-19 ARRIVED IN AFRICA RELATIVELY LATE, ALL 54 COUNTRIESARE NOW AFFECTED
The curve of the pandemic in Africa is bending gradually• With over 1,200,000 reported cases and28,850 reported deaths as of August 27,
2020, Africa has been the least affectedcontinent.
• The curve of the pandemic is bending
gradually in Africa, but hotspots arepresent in South Africa, Egypt, Nigeria,and Algeria.

Source: Johns Hopkins University COVID–19 database.

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AFRICA IS INADEQUATELY PREPARED TO CONTAIN THE PANDEMIC
Health system preparedness for epidemic threats varies significantly, with 33 countries rated as least prepared

Source: Global Health Security (GHS) Index.

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COVID–19 HAS REVERSED THE GAINS IN MEETING SDG TARGETS FOR POVERTY
AND EMPLOYMENT• Extreme poverty is projected to increase by2.14-2.84 pp in 2020 and by 2.51-3.63 pp in
2021. COVID-19 could push 49 million into
extreme poverty.

Between 28.2 and 49.2 million people to fall into
extreme poverty• An estimated 25 to 30 million jobs could be
lost as a result of the economic falloutcaused by COVID-19.

Sources: Staff computations using World Bank’s PovcalNet datasets, growth projections by African Development Bank
Statistics Department, and population growth by United Nations Population Division.

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AFRICA’S YOUNGER DEMOGRAPHIC STRUCTURE COULD BE HELPING TO MITIGATETHE HEALTH IMPACTS OF COVID–19Fatality rates are higher for countries with large
shares of older people…

…and lower for those with large shares of youngerpeople, as in Africa

Sources: Staff computations using data from the World Health Organization and UNDESA. 19 April 2020

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SECTION 3
POLICY OPTIONSSECTION 3
POLICY OPTIONSMAIN POLICY RECOMMENDATIONS
Public health responses:• Develop effective information sharing and communication strategies.
• Allocate sufficient resources to the health sector and develop emergency plans.
Fiscal policy responses:• Support vulnerable households with targeted cash transfers and social safety net programs.
• Help businesses stay afloat by providing targeted subsidies and tax reliefs.
Monetary policy responses:• Ease financial conditions by injecting liquidity.
• Use unconventional policy tools to support affected sectors.
Labour market and informal sector responses:• Assist vulnerable groups, especially women and youth in informality.
• Use active labour market policies to protect workers and their jobs.
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STRATEGIES FOR REOPENING ECONOMIES AND ACCELERATING RECOVERYThe “zero tolerance” approach:•Governments would refrain from reopening economic and social activity until there arezero or no reported new cases of the infection. This is likely to take longer and have
unbearable costs.

The “staggered” approach:•••Governments would reopen economic and social activity in a phased and incrementalmanner on the basis of transmission risks.
Businesses with low-to-medium transmission risks such as manufacturing, construction andsome retail services can be reopened first.
If there are no rebounds, proceed to open high transmission risk activities such as hotels,schools, restaurants, sports, and entertainment.
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KEY TAKEAWAYS

Despite the COVID-19 pandemic, opportunities abound in Africa:•••••

GDP growth projected to rebound in 2021. A V-shaped recovery still in view.
A large, vibrant and youthful market with consumer business spending
estimated $6.7trillion per annum.
With the AfCFTA, there is a one-stop-shop worth $3trillion, and population of1.3 billion.
Increasing participation in GVCs due to lower wages, and growing productivity.
Improving doing business climates through the adopting of strong businessenvironment reforms.
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