Angolan economy should contract 4% this year, warns IMF

The Bretton Woods institution now sees the sub-Saharan economy contracting 3,2%, double what it had forecast in April, a downward revision explained by the Covid-19 pandemic and a weaker external environment.

The International Monetary Fund (IMF) has revised the projections for the Angolan economy and now points to a recession of 4% this year, in view of the projection of a 1,6% contraction published in April, noting that the fifth year of negative growth in the The country will be marked by declines in oil prices and production, more difficult financing conditions and a deterioration in domestic economic activity.

In reviewing the Regional Economic Outlook for Sub-Saharan Africa, the IMF said, however, that "an improvement in oil prices and support measures should help to reinvigorate growth to 3,2% in 2021".

The Bretton Woods institution now sees the sub-Saharan economy contracting 3,2%, double what it had forecast in April, a downward revision explained by the Covid-19 pandemic and a weaker external environment.

"This is a crisis that moves quickly," said Abebe Aemro Selassie, director of the IMF's African department. "Recent developments suggest that the slowdown will be significantly greater than we had predicted just ten weeks ago."

“All the risks that we highlighted in April remain a concern, but the deterioration in the global outlook has been particularly impressive”, he added, stressing that the 3,2% contraction, if confirmed, will be the largest ever in the region .

"Covid-19 is likely to cause the first increase in global poverty since 1998, when the Asian crisis arrived," stressed the IMF. "According to the World Bank, in Sub-Saharan Africa, the pandemic could lead to an additional 26 million people in extreme poverty in 2020, and up to 39 million if the negative growth risks materialize."

South Africa expected to experience 8% recession

Among groups of countries, the IMF predicts that growth will fall further in countries dependent on tourism and resources, while growth in countries that are not dependent on resources should reach a level close to
from scratch. All but two countries are expected to see declines in income per capita real, varying between
0,1 and 15 percent.

The IMF highlighted the four largest economies in the region, including Angola. The institution led by Kristalina Georgieva sees South Africa's Gross Domestic Product (GDP) contracting 8% this year, up from 5.8% in the projection in April, as the country had to extend the lockdown until the end of April with only gradual deflection. in May and June.

Nigeria, like Angola, is expected to be heavily impacted by the fall in oil prices, which is expected to lead to a 5,6% recession in 2020, compared to the previous 3,6% projection. In Ethiopia there is expected to be a positive growth of 1,9% this year, although 1,3 percentage points less than in the April projection.

The IMF predicts that growth in the region will gradually recover, assuming that the pandemic
decreases and confinements are reduced in the second half of 2020.

Regional growth is projected at 3,4% in 2021, 0,6 percentage points below the April 2020 projection.

"The projected 2021 recovery is less than the expected global growth rate, because the policy packages highlighted by Sub-Saharan African countries to facilitate recovery are considerably smaller than those implemented in advanced economies and many emerging economies," he explained.

"In the region's largest economies, real GDP is expected to return to pre-crisis levels only in 2023 or 2024," he concluded.

[Updated at 13:53 am]

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