After contracting by an estimated 3.7 per cent in 2020 due to the Covid-19 pandemic and its effects, economic growth in Sub-Saharan Africa is expected to rebound moderately to 2.7 per cent in 2021, the World Bank has projected. In its January 2021 Global Economic Prospects report, the World Bank forecast recovery buoyed by private consumption and investment which are likely to be slower than previously envisioned. Export growth is expected to accelerate gradually, in line with the rebound in activity among major trading partners. “The resumption in activity in major advanced and emerging economies and key trading partners of the region (Europe, China, US) is chiefly underpinned by positive news on vaccine development and rollout as well as new rounds of fiscal stimulus,” the World Bank noted. The expectations of a sluggish recovery in Sub-Saharan Africa reflect persistent COVID-19 outbreaks in several economies that have inhibited the resumption of economic activity. The World Bank projected that the pandemic could cause per capita incomes to decline by 0.2 per cent this year, setting Sustainable Development Goals (SDGs) further out of reach in many countries in the region. This reversal is expected to push tens of millions more people into extreme poverty over last year and this year. Among the major risks include growth in major trading partners could fall short of expectations as well as challenges in the distribution of a COVID-19 vaccine in the region. “Government debt in the region has increased sharply to an estimated 70 per cent of GDP last year, elevating concerns about debt sustainability in some economies. Banks may face sharp increases in non-performing loans as companies struggle to service their debt due to falling revenues. Lasting damage of the pandemic could depress growth over the long term through the chilling effects of high debt on investment, the impact of lockdowns on schooling and human capital development, and weaker health outcomes,” the bank noted. Rwanda’s economy is expected to grow by 5.7 per cent this year after contracting by an estimated 0.2 per cent in 2020.
