Sub-Saharan Africa's economy is set to recover in 2021 - a marked improvement over the extraordinary contraction of 2020, the International Monetary Fund's (IMF) latest Regional Economic Outlook has reported.
The outlook maintained projections that the Rwandan Economy
will grow by 5.1 per cent in 2021 after a contraction of 3.4 per cent in 2020.
IMF noted that the recovery is buoyed by among other things
an improving favorable external environment, including a sharp improvement in
trade and commodity prices as well as improved harvests have lifted
agricultural production.
The agency however noted that the outlook remains highly
uncertain as the recovery depends on the progress in the fight against COVID-19
and is vulnerable to disruptions in global activity and financial markets.
"At 3.7 per cent this year, the recovery in sub-Saharan
Africa will be the slowest in the world-as advanced markets grow by more than 5
percent, while other emerging markets and developing countries grow by more
than 6 percent. This mismatch reflects sub-Saharan Africa's slow vaccine
rollout and stark differences in policy space," Abebe Aemro Selassie,
Director of the IMF's African Department said.
The non-resource-intensive countries are growing at a much
faster rate than resource-rich countries-a pattern that precedes the crisis and
has been amplified by recent events, highlighting fundamental differences in
resilience.
Abebe expressed concern over widening gaps between countries
which has been accompanied by growing divergence within countries, as the
pandemic has had a particularly harsh impact on the region's most vulnerable.
"With about 30 million people thrown into extreme
poverty, the crisis has worsened inequality not only across income groups, but
also across subnational geographic regions, which may add to the risk of social
tension and political instability. In this context, rising food price
inflation, combined with reduced incomes, is threatening past gains in poverty
reduction, health, and food security," the report read in part.
Across the region, public debt is predicted to decline
slightly in 2021 to 56.6 per cent of GDP but remains high compared to a
pre-pandemic level of 50.4 per cent of GDP.
"Half of sub-Saharan Africa's low-income countries are
either in or at high risk of debt distress. And more countries may find
themselves under future pressure as debt-service payments account for an
increasing share of government resources," the report further noted.
Rwanda's growth projections are buoyed by scaled-up
government spending to accommodate additional spending needs due to the more
protracted nature of the pandemic and the need to minimize scarring.
It will however require more time, up to 2023, for growth to
return to its pre-pandemic.
"The authorities' policy response has remained
well-designed and targeted. It aims at swiftly procuring and securing financing
for vaccines, increasing fiscal support for households and businesses, and
providing sufficient liquidity to the banking system given the protracted
nature of the pandemic and the need to minimize any lasting socio-economic
impact," IMF noted.
Containing financial sector vulnerabilities, the IMF noted,
will be key to safeguarding financial stability as well as intensified
monitoring of credit risk, prudent restructuring, and timely recognition of
problem loans.
0 comments:
Post a Comment