Africa’s quarterly Economic performance and outlook July–September 2022

Abstract

It is projected that annual economic growth in Africa will drop to 3.9 per cent in 2022 and will remain at this level in 2023 and 2024, with a growing downside risk. Currently, consecutive and overlapping shocks, such as the coronavirus disease (COVID-19) pandemic, the war between the Russian Federation and Ukraine, and climate change shocks have placed strain on economic growth, causing global supply chain bottlenecks and commodity price shocks. Because of the shocks themselves, reactions to them (e.g. the Federal Reserve of the United States of America aggressively hiking interest rates) and internal difficulties within countries, the world may witness a recession in 2023, one of the most severe impacts of which could be a financial crisis in emerging markets and developing countries. In 2022, the African continent’s budget deficit is projected to reach 6.6 per cent of gross domestic product (GDP) and the government debt-to-GDP ratio in Africa is expected to end the year at 69 per cent. Projections indicate that the debt-to-GDP ratio will continue to deteriorate, owing to global financial conditions. Budgetary policy trade-offs are becoming increasingly challenging, in particular for highly indebted countries whose fiscal flexibility has been depleted by their reaction to the COVID-19 pandemic.