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Africa’s Economic Forecast According to AfDB

Africa’s economies are expected to bounce back this year, according to the African Development Bank’s (AfDB) African Economic Outlook 2021, but governments will continue to face substantial debt risks as the costs of Covid-19 mount. Real GDP on the continent is projected to grow by 3.4% in 2021 after shrinking by 2.1% last year, a recovery driven by the effective deployment of therapeutics and vaccines, continued implementation of the Africa Continental Free Trade Agreement, and the introduction of digitalisation and work-from-home arrangements. More than half of the countries on the continent have now received vaccines, with deliveries under the Covax programme starting in February. However, the recovery could still be jeopardised by a resurgence of Covid–19, limited capital flows, low commodity prices, low tourism and remittances, extreme weather events, and social tensions, says the Bank, which again highlighted Africa’s precarious debt situation.  The Bank estimated that African governments needed additional gross financing of about $154bn last year. The average debt-to-GDP ratio stabilised at around 60% of GDP between 2017 and 2019, but is projected to increase “significantly” by 10-15% by 2021 as countries borrow to make up fiscal shortfalls.