Severe Economic Downturn Undermining Dev’t Prospects in Africa: UN Report

March 31/2021(ENA)  The United Nations warned today that the devastating socio-economic impact of COVID-19 pandemic will be felt for years to come unless smart investments in economic, societal and climate resilience ensure a robust and sustainable recovery of the global economy.

African countries need strong policy actions and further support from the international  community in averting a debt crisis and protracted low growth, the report added.

In 2020, the world economy shrank by 4.3 percent, over two and half times more than during the global crisis of 2009. The modest recovery of 4.7 percent expected in 2021 would barely offset the losses of 2020, says the latest World Economic Situation and Prospects.

Developed economies, projected to see a 4 percent output growth in 2021, shrank the most, by 5.6 percent, due to economic shutdowns and subsequent waves of the pandemic, increasing the risk of premature austerity measures that would only derail recovery efforts globally.

Developing countries saw a less severe contraction at 2.5 percent, with an expected rebound of 5.6 percent in 2021, according to the estimates presented in the report.

However, economic contraction among developing nations, falling exports and local consumption rates as well as high levels of public debt will significantly increase poverty levels.

African countries are experiencing an unprecedented economic downturn with major adverse impacts on development. Lower commodity prices, the collapse of tourism and lower remittances – exacerbated by much-needed domestic lock downs and other measures to control the spread of the pandemic – have caused a severe and widespread deterioration of the economic situation.

Limited fiscal space, challenging financing conditions and rising public debt have increased the risks of debt distress.

“We are facing the worst health and economic crisis in 90 years. As we mourn the growing death toll, we must remember that the choices we make now will determine our collective future,” said UN Secretary-General António Guterres, who will address the Davos Agenda event later today.

“Let’s invest in an inclusive and sustainable future driven by smart policies, impactful investments, and a strong and effective multilateral system that places people at the heart of all socio-economic efforts.”

The report underscores that sustained recovery from the pandemic will depend not only on the size of the stimulus measures, and the quick rollout of vaccines, but also on the quality and efficacy of these measures to build resilience against future shocks.