African economies projected to rebound in 2021
Economic growth in Africa is expected to rebound after its worst recession in 50 years, according to the African Development Bank (AfDB)’s African Economic Outlook 2021. The AfDB predicts that digitization and fair competition will drive a 3.4 percent expansion in real GDP in 2021 and sustained growth beyond 2021. The report emphasized the impact that the COVID-19 pandemic has left on the African economic landscape, estimating that the virus and subsequent policies to stop its spread had caused 30 million Africans to slip into poverty in 2020. During this time, Africa’s economies contracted by 2.1 percent.
In attempt to weather the pandemic, governments substantially increased their spending, which saw debt-to-GDP levels increase by 10 to 15 percentage points, leaving governments with less flexibility to guide a post-pandemic recovery. As a result, the AfDB highlighted the importance of reducing the debt burden in future economic growth. It also called upon the international community to coordinate with African policymakers and debtholders to achieve financial stability and prospects for growth.
For strategies on how governments can tackle the challenge of debt sustainability, consult “Debt sustainability and financing for development: A key post-COVID challenge,” in this year’s Foresight Africa.