Global Economic Outlook: Sub-Saharan Africa’s growth forecast to accelerate to 3.6% in 2022 and rise further to 3.8% in 2023

The Global Economic Prospects report 2021of the World Bank has indicated that global economies could slow down in 2022 following the fresh threats of the Omicron various amid COVID-19 despite the strong rebound in economies recorded in 2021.

The rapid spread of the Omicron variant indicates that the pandemic will likely continue to disrupt economic activity in the near term. A notable deceleration in major economies including the United States and China could put some pressure on external demand in emerging and developing economies.

According to the report, the rise in inflation, debt, and income inequality could endanger the recovery in emerging and developing economies, such as Ghana and the Sub-Saharan African countries.

The report projected that the global growth is expected to decelerate markedly from 5.5 per cent in 2021 to 4.1 per cent in 2022 and 3.2 per cent in 2023 as demands on goods and services keep increasing amid post-COVID-19 across the world.

It indicated that output in Sub-Saharan Africa grew by an estimated 3.5 per cent in 2021, driven by a rebound in commodity prices and an easing of social restrictions. However, the recovery remains fragile and insufficient to reverse a pandemic-induced increase in poverty and the threat of recurrent COVID-19 outbreaks lingers. The Omicron variant is now contributing to a surge in new cases across the region.

More than 70 per cent of SSA countries reported at least a 50 per cent increase in new COVID-19 cases during the last two weeks of 2021. The services, tourism, and manufacturing sectors have been adversely affected by the pandemic, while sustained losses to incomes and employment, and elevated inflation have held back a recovery in consumer spending.

However, Ghana’s projection stands at 5.5 per cent and 5.0 per cent respectively for 2021 and 2022 as against Nigeria which is projected to stand at 2.5 per cent and 2.8 per cent respectively. This means the economies of Ghana is likely to perform better if the rate of inflation is checked and the debt ratio is decreased.  

At a time when governments in many developing economies lack the policy space to support activity if needed, new COVID-19 outbreaks, persistent supply-chain bottlenecks and inflationary pressures, and elevated financial vulnerabilities in large swaths of the world could increase the risk of economic growth and rebound.

The Group President of the World David Malpass in the Report noted that the economic growth of countries is largely dependent on international action and a comprehensive set of national policy responses.

“The world economy is simultaneously facing COVID-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful to developing countries – putting more countries on a favourable growth path requires concerted international action and a comprehensive set of national policy responses,” he said.

Source: Amos Ekow Coffie with materials from World Bank, Global Economic Index and the IMF.