Zimbabwe’s fragile economy will suffer a significant shrink due to depressed economic activity a negative result of the Coronavirus pandemic, which is also anticipated to negatively impact other African economies.
The International Monetary Fund (IMF) paints, in an updated outlook for Sub-Sahara Africa (African countries expect Nigeria and South Africa), a much gloomier picture for Zimbabwe’s fragile economy, predicting a 10.4 percent Gross Domestic Product (GDP) shrinkage.
In a revised outlook IMF says earlier anticipated impact could worsen in Sub Sahara Africa with GDP plunging by 3.2 percent up from 1.8 percent, relegating millions to food insecurity, in the highest global poverty jump since 1998.
It says regional economies will only rebound in 2021 as countries gradually ease lockdown measures urging governments to focus on safeguarding social services and upscale support for most impacted businesses.
IMF also commended African governments for their response but cautions for a coordinated effort by all development partners will be key in the recovery as the regional economies cannot tackle these challenges alone.
“The outlook for 2020 for sub-Saharan Africa is considerably worse than was anticipated in April and subject to much uncertainty. Economic activity this year is now projected to contract by some 3.2 percent, reflecting a weaker external environment and measures to contain the COVID-19 outbreak.
“Growth is projected to recover to 3.4 percent in 2021 subject to the continued gradual easing of restrictions that has started in recent weeks and, importantly, if the region avoids the same epidemic dynamics that have played out elsewhere.
“In nominal terms, the regional GDP in 2020 will be by $243 billion smaller than projected in October 2019. All but two countries are set to experience falls in real per capita income, ranging between 0.1 and 15 percent. On average, per capita incomes across the region will fall by 7 percent relative to expected levels back in October 2019 and close to levels seen nearly a decade ago.
“COVID-19 is likely to cause the first increase in global poverty since 1998, when the Asian Crisis hit. According to World Bank estimates, in sub-Saharan Africa the pandemic could push about 26 million more people into extreme poverty in 2020, and up to 39 million in case downside risks to growth materialize.
“Regional policies should remain focused on safeguarding public health, supporting people and businesses hardest hit by the crisis, and facilitating the recovery. The region cannot tackle these challenges alone, and a coordinated effort by all development partners will be key,” said IMF.
The revised outlook states that growth is expected to fall the most in tourism-dependent and resource-intensive countries while growth in non-resource intensive countries is expected to come to a near standstill.
IMF also said countries ‘across Africa still face financing needs amounting to over US$110 billion in 2020 alone, with US$44 billion yet to be financed warning this could worsen as downside risks to growth materialize.
“The COVID-19 pandemic comes on top of existing security and environment challenges, which could aggravate food insecurity in some countries and exacerbate inequalities.
IMF said, “Real per capita GDP in the region is projected to contract by 5.4 percent in 2020, before recovering by 1.1 percent in 2021. This will bring the per capita GDP 7 percentage points below the level projected before the COVID-19 outbreak, in October 2019, and almost back to its level in 2010.”
