Sub-Saharan Africa was hit hard by the COVID-19 shock in 2020, experiencing the first recession in roughly thirty years. However, the impact of the public health crisis and pandemic-induced global recession has been less severe than in-itially feared, and weaker than in other EM regions. This is the result of commodity prices recovering faster than expected and the virus’ spread remaining relatively limited. Within the region, countries with more diversified export bases have managed the crisis better, while oil exporters such as Angola, Cameroon, and Nigeria are affected most negatively.
A strong bounce back in 2021 is expected in countries where macroeconomic and policy environment remain supportive—Côte d’Ivoire, Ghana, Kenya, and Tanzania—while an only moderate oil price recovery will weigh on economic activity in Angola, Cameroon, and Nigeria. Across the region, the COVID-19 shock has caused a substantial widening of fiscal deficits and government debt is set to increase sharply. As a result, while renewed risk-on sentiment in global financial markets is alleviating immediate domestic and external financing concerns, policy space is scarce. In the case of a second wave of the pandemic, governments would struggle to support the recovery as forcefully as they did in 2020H1.
In this Frontier Africa Regional Report, the Institute of International Finance takes a close look at macroeconomic developments in nine Sub-Saharan African countries and zoom in on the most important developments for each of them in detail. These include fiscal issues such as the financing of deficits in Ghana and escalating debt sustainability concerns in Zambia, the impact of capital flows dynamics on Nigeria’s external financing po-sition, structural impediments to growth in Cameroon and Ethiopia as well as supportive macro and policy environments in Côte d’Ivoire, Kenya, and Tanzania, and, finally, major policy reforms in times of crisis in Angola.
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