IMF downgrades SSA growth forecast for 2022 to 3.7%

The International Monetary Fund (IMF) has downgraded the growth forecast for sub-Saharan Africa to 3.7 percent for 2022 and 4 percent for 2023. This adjustment comes as a response to the impact of the Omicron variant of the COVID-19 virus on the global economy and the region. Abebe Selassie, the Director of the African Department at the IMF, highlighted the challenges facing Africa during an interview with CNBC Africa. Selassie mentioned that the global economic outlook has been revised down to 4.4 percent for this year due to effects in advanced countries and emerging markets. The revision for sub-Saharan Africa is relatively modest at 0.1 percent, projecting a growth rate of 3.7 percent for the region in 2022. Countries like South Africa have been significantly impacted by the Omicron variant, contributing to the lower growth forecast. In addition to COVID-19 and its variants, the IMF is also concerned about other headwinds that could affect Africa in 2022. Selassie pointed out that monetary policy tightening in major central banks could lead to higher borrowing costs for countries with significant integration in global financial markets, posing a risk in terms of market access. On the other hand, movements in commodity prices could benefit countries that are major exporters, leading to a varied impact across the region. Selassie emphasized the importance of governments in the region enhancing vaccination efforts. While acknowledging the challenges in accessing vaccines earlier due to global supply constraints, Selassie noted that African countries are now focused on effective distribution and administration of vaccines. He commended governments for containing infection levels relative to elsewhere but stressed the need for continued vaccination efforts. The IMF is also keeping a close eye on the public finances of many sub-Saharan African countries, with concerns that fiscal pressures may increase in 2022. Selassie emphasized the importance of fiscal reforms and increasing domestic revenue to ensure debt sustainability and address investment needs in vital sectors like healthcare and infrastructure. When discussing the instability in the Sahel region, Selassie highlighted the urgent need for international cooperation to address deep sociopolitical challenges and security threats that have plagued the region. Despite the challenges, Selassie expressed hope that increased attention and support from the international community could help alleviate the crisis in the Sahel. Looking ahead, Selassie outlined key priorities for a stronger recovery in sub-Saharan Africa. These priorities include sustaining vaccination efforts, addressing fiscal challenges, implementing inclusive policies to combat poverty and education disruptions caused by the pandemic, diversifying economic activities by leveraging digitalization, and embracing the climate change agenda to drive growth and adaptation. By focusing on these areas, countries in Africa can build back better and achieve a more resilient and sustainable recovery.