Africa central banks slash growth forecasts

Central banks in sub-Saharan Africa have sharply revised downward their countries' growth forecasts for 2020 as they anticipate the impact of the rapidly evolving coronavirus pandemic on the regional economy being more severe than expected.

Ghana, one of the world's top 10 fastest-growing economies, warned during a hurriedly rescheduled policymaker meeting that the adverse effects of Covid-19 on growth, along with the sharp fall in commodity prices, will weigh heavily on economic activities.

Bank of Ghana, the central bank, forecast the country's economic growth to slow to five per cent this year, or even decelerate to 2.5 per cent in a worst-case scenario, due to the negative impact of Covid-19 on crude oil export earnings and domestic production.  

East African countries have offered bleak forecasts as well. The Central Bank of Kenya said the coronavirus outbreak would have a severe impact on the economy and this year's growth is expected to decline significantly to 3.4 per cent from a previous estimate of 6.2 per cent. as demand by Kenya's main trading partners decreases, causing disruptions to supply chains and domestic production.

Gerrishon Ikiara, a senior economics lecturer at the University of Nairobi, said Kenya's GDP growth rate could slump to about two per cent at the end of 2020 depending on how long the coronavirus takes to be brought under control at the global, regional and individual country levels.

"Kenya's tourist industry has been heavily battered with huge negative impact on foreign exchange earnings and employment. Many of the ongoing major infrastructural projects may have to be scaled downwards as budgetary contractions take place, further worsening the socio-economic conditions of the people," said Dr Ikiara.

South Africa also downgraded its growth forecast after reviewing the Covid-19 fallout. At a regular gathering last month, the South African Reserve Bank predicted the country's economy, which was already on a technical recession following an energy crisis last year, is expected to contract by 0.2 per cent in 2020.