The African continent risks sliding into stagflation due to a combination of slow growth and high
Inflation according to the 2022 African Economic Outlook released by the African Development Bank Group (AfDB) seen by The Business Wiz.
According to the Report, Africa’s real GDP is projected to slow to 4.1 percent this year from 7 percent projected in 2021 due to uncertainties related to the persistence of the COVID-19 pandemic, and the impact of the Russia–Ukraine conflict.
“This growth will be driven largely by private consumption and investment on the demand side and by continued expansion in the services sector on the supply side,” the report said.
It noted Africa’s services sector, especially tourism, has shown strong post pandemic recovery and is likely to remain buoyant in the medium term, supported by industry, especially in mining, underpinned by soaring metal prices.
“Africa’s low COVID-19 vaccination rollout, persistent sovereign debt vulnerabilities, high debt levels, and climate and environmental concerns remain the main threats to medium- and long-term growth trajectories,” the report said.
It added that disruptions to global trade and supply chains; primarily in agricultural, fertilizer, and energy sectors—following the Russia–Ukraine conflict and the corresponding sanctions on trade with Russia have tilted the balance of risks to Africa’s economic outlook to the downside.
“If the conflict persists, Africa’s growth is likely to stagnate at around 4 percent in 2023. Strikingly, oil-importing countries will gain the most in 2023, with growth increasing from 3.7 per cent in 2022 to 4.1 per cent, underscoring the resilience and diversified sources of growth in these economies,” the report said.
The report stated that average inflation is forecast to accelerate to 13.5 per cent in 2022 from 13 per cent in 2021, fueled by a sharp rise in commodity prices, especially energy and food.