The continent of Africa experienced its worst recession in half a century in 2020.
- Leading data and Analytics Company, Global Data forecasts Africa economy to grow at a healthy pace of 3.8% in 2021 driven by rising global demand.
- It is expected that with the ease of COVID restrictions, untapped market opportunities, a rebound in commodity prices and a rise in oil prices, Africa will regain growth.
The continent of Africa experienced its worst recession in half a century in 2020. Leading data and Analytics Company, Global Data forecasts Africa economy to grow at a healthy pace of 3.8% in 2021 driven by rising global demand. It is expected that with the ease of COVID restrictions, untapped market opportunities, a rebound in commodity prices and a rise in oil prices Africa will regain growth.
The report notes that in Africa, the fastest-growing economies will be Morocco, Kenya, Ghana, Egypt and South Africa, that are forecast to grow above 4% real GDP growth in 2021. Morocco is expected to grow by 5.19% led by effective vaccination drive, accommodative monetary policies and fiscal stimuli.
Though the recovery of South Africa is projected at 4.09%, the recent violence in the country has created uncertainties. The rise in external demand for commodities is expected to help recovery in South Africa. Egypt’s growth is expected to be driven by private consumption.
Nigeria, Africa’s largest economy by GDP, is also estimated to exit recession, with growth at 2.3%. Rising insecurity, food inflation, debt service payments, and stalled reforms are cited as major hindrances to Nigeria’s recovery process.
Currency depreciations, fall in external financial flows, portfolio investments and a rise in public debt are some of the major challenges faced by African economies. This affected investor sentiment in 2020. FDI inflows declined by 20% in the African region in 2020 mainly due to fall in commodity prices and low-key investor sentiment amid the COVID-19 pandemic. The report states that Africa remains an attractive destination for investors due to its vast resource base and untapped market options. The UK has pledged an investment of $4.5bn in Africa by 2022.With an expected rise in energy demand, resource-seeking investments may increase in H2 2021. Additionally, the regional value chains and implementation of African continental free trade agreements will open new opportunities for African economies.
