The new (March 2021) ominously named ''Out of the frying pan...into the fire?'' Trade and Development Report by UNCTAD is now public
Bellow you will find interesting facts and figures included in the report, relevant to Africa.
VACCINE UNCERTAINTY
Prospects for vaccinations are also uncertain, particularly for developing countries. After rapid progress in research and clinical trials, thanks to strong public funding support in some countries, roll out has to date been surprisingly uneven including across advanced economies despite their widespread use of advanced purchase agreements. In developing economies access to vaccines has been limited, and despite concerns over scaling up production capacity in advanced countries, calls at the WTO to waive intellectual property rights on Covid-19 vaccines, to speed up production in some emerging economies, have been resisted. The experience has revealed serious shortcomings in the international health architecture and more generally a reticence to treat the pandemic as a truly global public health and economic challenge.
REGIONAL TRENDS IN GDP GROWTH: SOUTH AFRICA AND SUBSAHARAN AFRICA
Africa was severely hit in 2020 by the pandemic, which led to the worst economic performance in decades as economic output shrank 3.8 per cent, compared with a trend growth of 3.2 per cent over the last few years. The two main economies in sub-Saharan Africa were not exempted from the crisis. South Africa’s real GDP increased at an annualised rate of 6.3 per cent in the fourth quarter of 2020. This followed growth rates of 67.3 per cent in the third quarter and -51.7 per cent in the second quarter. According to the latest preliminary indicators, the overall growth for 2020 was - 7.0 per cent, representing the biggest annual fall in economic activity the country has registered since at least 1946. Given the very slow growth in the past years, such a shock brought back the annual GDP level to where it was in real terms seven years ago. Despite the impact of the pandemic on economic growth, agriculture production was strong in 2020 growing 13 per cent.
Government spending grew marginally (by less than 1 per cent) in 2020, which may have helped mitigate the sharp contraction in other parts of the economy. The construction sector, already in deep trouble before the pandemic, registered the largest contraction (20 per cent), marking the industry’s fourth consecutive year of economic decline. Higher frequency indicators point to a moderate improvement of the situation in early 2021, amid robust terms of trade and stronger exports. Yet, the South African Reserve Bank does not expect the economy to get back to prepandemic output levels soon, owing to the second wave of Covid-19 infections. Moreover, lower public and private investment in 2020, together with continued weakness in 2021, will weigh on growth prospects. In this context, the economy is expected to grow by 3.0 per cent in 2021. The growth of Nigeria’s output has been subdued for several years, often falling below population growth. In 2020, economic output declined by 1.9 per cent, the second annual decline in five years. The sharp contraction of oil production was a major driver and continuing uncertainty in the oil market poses some downside risks to the forecast. Overall, the Nigerian economy is expected to grow by 1.5 per cent in 2021. In Egypt, GDP growth recorded a preliminary figure of 0.7 per cent during the third quarter of 2020, up from -1.7 per cent during the second quarter. Meanwhile, the unemployment rate decreased to 7.3 per cent in 2020 Q3 from 9.6 per cent in 2020 Q2. Select demand-side leading indicators continue to display signs of recovery in during the fourth quarter of 2020. Overall, we expect Egypt to register growth of 0.2 per cent in 2020 and 2.5 per cent in 2021. In the rest of the continent, tourism dependent economies were severely hit, with sharp GDP contractions during the second quarter of 2020. Other oil-exporting countries, including Algeria, Angola, Cameroon, Equatorial Guinea and Gabon, also registered significant GDP decline. Though economic prospects look brighter as commodity prices rise, many African countries will continue to be seriously affected by the socioeconomic consequences of the global economic slowdown triggered by the pandemic. Even before Covid-19 hit, an increasing number of African countries were heavily indebted and financially stressed. In 2021, debt will become a greater concern for many African States, as government-debt-to-GDP exceed 100 per cent in several countries, including Zambia, which already defaulted in October 2020, Angola and the Republic of Congo. Meanwhile, Ethiopia announced in February 2021 that it was looking to make use of the G20 Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI), which explicitly raises the risk of a default event.
DIVERSIFICATION KEY FOR GROWTH
Across many countries in Latin America and Africa, commodity dependence, heavy reliance on capital inflows, and low rates of capital formation continue to make for a fragile growth trajectory. Diversification is essential for building resilience but this in turn requires strong investment in the public and private sectors. In both regions large debt overhangs acquired during the recovery from the global financial crisis have grown even larger over the past 9 months posing a potentially very serious constraint on sustained recovery, in the absence of appropriate multilateral support.
FOOD SECURITY
In many developing regions, such price surges, together with other idiosyncratic shocks, have spilled over to several other basic staple foods. These have triggered several domestic price warnings, i.e. domestic situations where prices of one or more basic food commodity are at abnormal high levels, plausibly harming the access to food, especially for the poorer households. Large economies such as Argentina, Bangladesh, Brazil, and Nigeria counted among the nine cases identified by the Food Price Monitoring and Analysis Bulletin of the Food and Agriculture Organization in February 2021. The Agricultural Market Information System (AMIS) stresses in its Market Monitor of February 2021 that after decades of progress, hunger has been on the rise over the last years. The rise in the number of conflicts, accelerating climate change and economic slowdowns had already pushed the number of chronically undernourished in the world to almost 690 million in 2019, 10 per cent more than five years before, of which 135 million faced acute hunger – compared to 80 million in 2015. The Covid-19 pandemic has exacerbated this already alarming situation owing to its induced income losses and the logistical bottlenecks it created. AMIS estimates a doubling of people acutely hungry to 270 million by late 2020, which poses significant barriers to incomegeneration and food security in the years ahead.
Find the full report here