Rising inflation slows Africa’s economic growth – World Bank | Tellwell Newspaper
Tellwell Newspaper, Abuja – Nigeria:
Global headwinds are slowing Africa’s economic growth as the continent continues to grapple with surging inflation, hindering progress in poverty reduction, the World Bank said on Tuesday.
In a statement obtained by Tellwell Newspaper, the global lending institution said governments in Africa needed to restore macro-economic stability and protect the poor against elevated food prices.
According to the World Bank’s latest Africa’s Pulse, a biannual analysis of the near-term regional macroeconomic outlook, economic growth in Sub-Saharan Africa is set to decelerate from 4.1% in 2021 to 3.3% in 2022.
This is a downward revision of 0.3 percentage points since April’s Pulse forecast, mainly as a result of a slowdown in global growth, including flagging demand from China for commodities produced in Africa, the global lender said.
The risk of stagflation comes at a time when high interest rates and debt are forcing African governments to make difficult choices as they try to protect people’s jobs, purchasing power and development gains, the statement noted.
The war in Ukraine is exacerbating already high inflation and weighing on economic activity by depressing both business investments and household consumption.
As of July 2022, 29 of 33 countries in Sub-Saharan Africa had inflation rates over 5% while 17 countries had double-digit inflation, it said.
“These trends compromise poverty reduction efforts that were already set back by the impact of the COVID-19 pandemic,” said Andrew Dabalen, World Bank Chief Economist for Africa.
“What is most worrisome is the impact of high food prices on people struggling to feed their families, threatening long-term human development,” Dabalen said.
“This calls for urgent action from policymakers to restore macro-economic stability and support the poorest households while reorienting their food and agriculture spending to achieve future resilience,” he stressed.
According to the World Bank, hunger had sharply increased in Sub-Saharan Africa in recent years, driven by economic shocks, violence and conflict, as well as extreme weather.
More than one in five people in Africa suffer from hunger and an estimated 140 million people faced acute food insecurity in 2022, up from 120 million people in 2021, according to the Global Report on Food Crises 2022 Mid-Year Update.
African governments’ response to these challenges was hamstrung by external borrowings as they had spent 16.5% of their revenues servicing external debt in 2021, up from less than 5% in 2010. Foreign debt is projected to stay elevated at 58.6% of GDP in 2022 in the sub continent, the World Bank warned.
To curb the ugly trend, the global lender urged African countries to optimize taxes and improve the efficiency of existing resources, especially in agriculture through climate-proof food production, while raising productivity, building resilience to climate change, and achieving food security for all, among others.
