Africa’s real gross domestic product (GDP) growth is likely to decelerate to 4.1% in 2022, reflecting the ebbing of base effects, uncertainties related to the persistence of the COVID-19 pandemic, and the impact of the Russia–Ukraine conflict, African Development Bank Group said in its latest “African Economic Outlook 2022” report.
Real GDP rebounded strongly in 2021, growing by 6.9%, supported by the recovery in global demand, higher oil prices, easing COVID-19 restrictions in most countries, and associated growth in domestic consumption and investment.
The average fiscal deficit in Africa is likely to narrow to 4% of GDP in 2022, from 5.1% in 2021, reflecting the scaling-down of COVID-19-related interventions and relative strengthening of domestic revenues.
Rising commodity prices triggered by the Russia–Ukraine conflict represent a major headwind for the fiscal situation in the short to medium term, especially for economies dependent on imports of energy and food commodities.
However, the Ivory Coast-based multilateral development finance institution bank suggested that the long-run policy response to economic diversification needs to include enhancing intra-Africa trade to build food self-sufficiency, which will be crucial to building economic resilience to future shocks.
Africa’s average current account deficit is projected to reach 2% of GDP in 2022, down from 2.4% in 2021, underpinned by a possible narrowing of the trade deficit and current transfers.
The report stated that average inflation is forecast to accelerate to 13.5% in 2022 from 13% in 2021, fueled by a sharp rise in commodity prices, especially energy and food.
(Editing by Brinda Darasha; email@example.com)