covid-19: global economic outlook and implications for sub … · 2020. 8. 17. · covid-19 –...

17 August 2020Heike Wengert, Munich Re Economic Research

COVID-19: Global Economic Outlook and Implications for Sub-Saharan Africa

217 August 2020COVID-19: Global Economic Outlook and Implications for Sub-Saharan Africa – Heike Wengert

Agenda

1. COVID-19: Global Economic Outlook 2. Implications for Sub-Saharan Africa3. Q&A

COVID-19: Global Economic Outlook

Image: 3alexd / Getty Images

4COVID-19 – Global Economic Outlook and Implications for Sub-Saharan Africa

The world economy in 2020: From positive outlook to severe recession in just a couple of months

IMF WORLD ECONOMIC OUTLOOK, JANUARY 2020

Tentative Stabilization, Sluggish Recovery?

“The global economy is projected to contract sharply by -3 % in 2020, much worse than during the 2008-09 financial crisis.”

“The risks for even more severe outcomes … are substantial.“

“Global growth is projected to rise to 3.3 %in 2020 …”

“Downside risks … remain prominent, including … further worsening of relations between the US and its trading partners … "

Source: IMF, Munich Re Economic Research

IMF WORLD ECONOMIC OUTLOOK, April 2020

The Great Lockdown

IMF WORLD ECONOMIC OUTLOOK UPDATE, JUNE 2020

A Crisis Like No Other, An Uncertain Recovery

2.93.3 3.4

2019 2020e 2021e

World

3.3 3.5 3.5

2019 2020e 2021e

Sub-Saharan Africa

IMF GDP growth projections (real, in %) IMF GDP growth projections (real, in %) IMF GDP growth projections (real, in %)

2.9

-3

5.8

2019 2020e 2021e

World

3.1

-1.6

4.1

2019 2020e 2021e

Sub-Saharan Africa

2.9

-4.9

5.4

2019 2020e 2021e

World

3.1

-3.2

3.4

2019 2020e 2021e

Sub-Saharan Africa

“The pandemic has had a more negative impact on activity in 1H 2020 than anticipated, and the recovery is projected to be more gradual ...” “Fundamental uncertainty … significant

downside risks … scenario 2nd outbreak…”


Global outlook for 2020 has deteriorated at an unprecedented speed since mid March… but signs of stabilisation since May

2.6 2.4 2.2

0.9

-1.0

-1.8

-2.7

-3.8-4.3

-4.6 -4.7 -4.8

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

01/20 02/20 03/20 03/20 03/20 03/20 04/20 04/20 05/20 05/20 06/20 07/20

MR Economic Research forecasts for 2020 global real GDP growth since January 2020* (in %)

* Baseline forecastsSource: Munich Re Economic Research


Economic policy uncertainty reached record levels

0

50

100

150

200

250

300

350

400

450

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Global Economic Policy Uncertainty Index (news-based measure)

US electionBrexit

referendum

Global Financial

Crisis

Gulf War II9/11

Source: www.policyuncertainty.com (last data point: July 2020), Munich Re Economic Research

Trade disputes, geopolitics

Coronavirus


Stock markets have seen a strong rebound after declines in March – investors looking forward to a recovery of the economy?

2,200

2,400

2,600

2,800

3,000

3,200

3,400

01/20 02/20 03/20 04/20 05/20 06/20 07/20 08/20

S&P 500

2,300

2,700

3,100

3,500

3,900

01/20 02/20 03/20 04/20 05/20 06/20 07/20 08/20

Major stock market indices (since January 2020)

Source: Bloomberg (as of 12 August 2020), Munich Re Economic Research

-34%+49%

Eurostoxx 50

-38%

+40%

PresenterPresentation NotesFor example, monetary policy supports financial markets but less so the real economy. Longer term, fiscal and monetary easing will burden firms' balance sheets.Unlike economic indicators, financial markets are forward-looking.The composition of the stock market and the economy differ greatly. SME have little stock market presence despite representing a large part of the economy.

22

26

30

34

38

42

46

50

54

58

06/2016 06/2017 06/2018 06/2019 06/2020


Global economic activity hit a record low in April, contraction was still substantial in May, expansionary territory again in July

Aggregate Composite Purchasing Manager Indices (PMI)

Advanced Economies

Emerging Markets

Worldabove 50 means expansion


22

26

30

34

38

42

46

50

54

58

06/2016 06/2017 06/2018 06/2019 06/2020


Lockdown-induced downturn strong in services, manufacturing hurt by supply chain disruptions and lack of demand

Global Purchasing Manager Indices (PMI) – Manufacturing vs. Services

above 50 means expansion


Manufacturing

Services

COVID-19 – Global Economic Outlook

Extent and speed of worldwide downturn in H1 2020 significantly exceeding developments during the global financial crisis

10

65

70

75

80

85

90

95

100

105

2006 Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1 2016 Q1 2018 Q1 2020 Q1

Multiple negative economic effects resulting from Lockdowns / social distancing Supply-chain disruptions Loss of demand (e.g. travel) Sentiment effects (fear /

precaution) Financial market repercussions

Sectors hit most: Hospitality, leisure Travel & Tourism Personal services Transport (airlines, rail)

Source: Oxford Economics, Munich Re Economic Research

-3.3% during 2 quarters

-10% during 2 quarters

World real GDP (index, 2019 Q4 = 100)

PresenterPresentation Notes… this is what we think that we know


All major central banks have enacted unprecedented monetary stimulus

Measure Intensity

Interest rates cuts

Liquidity support ✓✓

Asset purchases ✓✓✓

Easing regulations ✓

USD swap line ✓

ECB

Measure Intensity

Interest rates cuts ✓✓

Liquidity support ✓✓✓



USD swap line ✓

BoE

Measure Intensity

Interest rates cuts ✓✓✓

Liquidity support ✓✓✓


Easing regulations ✓✓

USD swap line

Fed

Measure Intensity

Interest rates cuts

Liquidity support ✓

Asset purchases ✓

Easing regulations

USD swap line ✓

BoJ

Measure Intensity

Interest rates cuts ✓

Liquidity support ✓✓

Asset purchases


USD swap line

PBoC

Source: IHS Markit

2.33.0

3.9

0.30.9 0.7

3.5

4.5

5.8

0.5

2.11.7

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Apr 20 Mai 20 Jun 20 2008 2009 2010

COVID-19 Global financial crisis

Other G20 G7


Economic policy is doing “whatever it takes” – G20 fiscal response dwarfs global financial crisis and still moves up

Announced fiscal measures (% of GDP)

Source: IMF Fiscal Monitor (database as of June 2020)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

MX

CN

SAU

RU

IDN

AUS

ARG

USA C

AZA

FIN

DBR

ATU

RKO

R ES FR UK JP DE IT

Additional spending and forgone revenue

Loans, equity, and guarantees


Short-term work schemes limit unemployment spikes in Europe, US with extended unemployment assistance to support incomes

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2000 Q1 2002 Q1 2004 Q1 2006 Q1 2008 Q1 2010 Q1 2012 Q1 2014 Q1 2016 Q1 2018 Q1 2020 Q1

Unemployment rate, 2000 Q1 – 2020 Q4e (quarterly average, in %)


Germany

USA

Eurozone

UK


Fall in world trade projected to be in a similar magnitude as in 2009, export-oriented countries highly dependent on global recovery in trade

Global imports of goods and services(year-over-year real growth, in %)

-20

-15

-10

-5

0

5

10

15

20

2006Q1

2008Q1

2010Q1

2012Q1

2014Q1

2016Q1

2018Q1

2020Q1

2022Q1


Exposure to global trade: Exports in % of GDP (in 2019)

0% 20% 40% 60%

GermanyAngola

South KoreaMauritius

GhanaIvory Coast

CanadaFrance

UKSouth Africa

DCRSenegal

IndiaChinaJapan

CameroonBrazil

NigeriaUSA

KenyaEthiopia

Selected Sub-SaharanAfrican countries

Selected large economies

PresenterPresentation NotesIt might take at least two years to reach last year’s level of world trade again

Selected countries, not highest

80

85

90

95

100

105

110

115

120

COVID-19 – Global Economic Outlook and Implications for Sub-Saharan Africa

Global recovery in two stages: strong V-shaped rebound in the beginning, but more sluggish recovery afterwards

15

Turning point in Q2 2020: Many countries in lockdown in April, but restrictions in many regions have eased in May and June

Global economy has since staged a robust rebound (e.g. retail sales in Europe and US)

But despite a strong initial bounce, high unemployment, surging insolvencies and consumer reluctance will limit the scale of the revival in H2 and beyond

At least one year of growth needed to get back to pre-crisis peak

Considerable downside risks remain (e.g. rise in COVID-19 cases in some parts of the world, massive wave of insolvencies)


World real GDP: baseline and distribution of plausible scenarios

Pre-coronavirus baseline (Jan 2020)

Current baseline

Index, Q4 2019 = 100


Global economic outlook: sharp recessions in 2020 and relatively slow recovery in many large economies in 2021

-4.8

5.7

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

World USA EZ Germany UK Japan China India Brazil SouthAfrica2018 2019 2020e 2021e

Annual real GDP growth 2018–2021e (in %)

Source: Munich Re Economic Research (as 21 July 2020)


Under any plausible scenario, inflation in major economies will be very low in 2020 – longer-term outlook poses more uncertainties

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

World USA EZ Germany UK Japan China India Brazil SouthAfrica

2018 2019 2020e

Annual CPI inflation 2018–2021e (in %)

Source: Munich Re Economic Research

2021e

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

10yr government bond yields (in %)

US and European yields have fallen to new record lows, Treasuries below 1% for first time – safe haven flows continue

18

UK

USA

Germany

-0.5

0.60.2


As of 11 August2020

0.1Japan


iStock-528612314

Implications for Sub-Saharan Africa


The COVID-19 outbreak has set off the first recession in Sub-Saharan Africa in 25 years, yet less severe than in other regions …

-4.8

0.0

-4.5 -5.4 -5.5 -5.6-7.7 -7.8 -7.9

5.78.1

3.35.3 5.1 4.9 5.5 5.8 4.4

-12.0

-8.0

-4.0

0.0

4.0

8.0

12.0

World EmergingAsia

MatureAsia/Pacific

SubSaharan

Africa

EasternEurope

NorthAmerica

LatinAmerica

WesternEurope

MENA

2019 2020e 2021e

Annual real GDP growth 2018–2021e (in %)


Real GDP growth in 2020 (in %, Sub-Saharan African and selected other large economies)


… and wide variation between countries in Sub-Saharan Africa


-5.4

-12.0

-8.0

-4.0

0.0

4.0

Viet

nam

Chi

naR

wan

daBu

rund

iG

uine

aEt

hiop

iaC

ôte

d'Iv

oire

Gha

naBe

nin

Keny

aC

amer

oon

Sene

gal

Burk

ina

Faso

Nig

eria

Aust

ralia

Gam

bia

Turk

eySu

b-Sa

hara

n Af

rica

USA

Indi

aJa

pan

Ger

man

yR

ussi

aD

CR

Gab

onC

anad

aM

exic

oBr

azil

Nam

ibia

Zam

bia

Sout

h Af

rica

UK

Ango

laIta

lyM

aurit

ius

Spai

nAr

gent

ina

Bots

wan

aC

ongo

, Rep

.

Selected Sub-Saharan African countries

Selected large economies

PresenterPresentation NotesFare even better than Advanced Economies

22

COVID-19: The economic impact may be more severe in emerging market economies as they are buffeted by additional pressure

Direct effect of containment /

mitigation measures

Commodity markets: drop in demand/prices

Currencies under pressure

Fiscal stress(lower government revenues, higher

expenditure)

Tourism: revenues are plunging

Capital outflows

Source: Munich Re Economic Research COVID-19 – Global Economic Outlook and Implications for Sub-Saharan Africa

Weak health care systems

PresenterPresentation NotesImpact transmission channels

First there is the direct effect of

Global vulnerability heatmap - Americas flashing red, Sub-Saharan Africa seems less vulnerable, except for South Africa


Overall COVID-19 structural vulnerability Covid-19 structural vulnerability scorecard


Europe 3.5 4.2 4.4 3.0MENA 4.0 3.9 3.8 3.8Asia 4.3 3.8 4.1 2.4Latin America 4.4 4.2 4.4 3.3Sub-Saharan Africa 4.7 3.5 4.8 2.2

Structuraleconomicvulnerability

Pandemicprevalence

Health-relatedvulnerability

Government response


The pandemic is still developing with regional differences highly relevant – Surge in Latin America, Africa less affected – so far

Daily deaths of patients diagnosed with coronavirus (7-day rolling average)

Source: Financial Times (as of 14 August 2020), Munich Re Economic Research

Resurgence in COVID-19 deathsapproaching mid-April peak

PresenterPresentation NotesPeak of daily deaths was in mid April, with Europe as the region hit mostThe surge in Latin america means global daily death toll on the rise once againLatin America now accounts for 45% of average global daily deathsThe US share of average global daily deaths has risen again to 18%India‘s problems are also increasingAfrica‘s share of daily daths is low compared to other regions: current estimate 4%

Keep in mind: data problems


Sub-Saharan Africa benefits from a young population, relativelyfew people are over 60

Population over 60 (in %)

Source: UN, Financial Times (as of 23 July 2020), Munich Re Economic Research

PresenterPresentation NotesThe vast majority of people worldwide who die of COVID-19 are over 60.The continent’s young population means the death rate is likely to be lower. There is also tentative evidence emerging that African countries may have a high prevalence of asymptomatic cases thanks to its young population. An antibody study conducted by the Mozambican government in the northern city of Nampula with a population of 750,000 found that some two-thirds of people infected had suffered only very mild symptoms or no symptoms at all.


However, the scope for the pandemic to spread as aggressively as elsewhere remains a very real threat, especially in South Africa

Daily new confirmed COVID-19 cases (rolling 7-day average)

Source: European CDC (last updated: 16 August 2020)

Adequate testing? Rate of positive tests (in % of total)

PresenterPresentation NotesSouth Africa ranks 5th based on total number of infections, and some weeks ago daily infections were still rising. Recent data is better

The default view on a logarithmic y-axis is helpful to compare the growth rates between countries: on a logarithmic axis the steepness of the line corresponds to the growth rate.

The available data on confirmed cases only becomes meaningful when it can be interpreted in light of how much a country is testing. This is the Our World in Data built the global database on COVID-19 testing and the line colors in this chart show whether a country is testing adequately or not.


Many African countries were quick to react to the pandemic, despite few cases; but economies cannot afford long lockdowns

COVID-19 government response stringency index (starting January 1, up to July 17)

Source: Financial Times, University of Oxford Blavatnik School of Government, IMF, Munich Re Economic Research

Measures in Sub-Saharan Africa No. of countries

Quarantine and self-quarantine 44

Travel restrictions and border closure 43

Cancellation of public gatherings 42

Closure of school and universities 36

Shelter in place and lockdown 34

Remote work 25

Many Sub-Saharan economies have reopened before the infection has peaked


Sub-Saharan countries dependent on commodity exports and tourism are hit most

IMF real GDP growth forecasts for Sub-Saharan Africa (in %)

Source: IMF (June 2020), Munich Re Economic Research

-10-8-6-4-202468

2020e 2021e 2020e 2021e 2020e 2021e 2020e 2021e 2020e 2021eTourism dependent

countriesNon-resource-

intensive countriesOther resource-

intensive countriesOil exportersSub-Saharan Africa

Commodity markets: widespread rally recently, with demand(China) and supply factors playing a role, yet oil prices still far down

29

Oil price, Brent (in USD per barrel)Commodity price indices (31.12.2019 = 100)

Source: Bloomberg (as of 12 August 2020), S&P GSCI, Munich Re Economic Research

0

20

40

60

80

100

120

140

160

Dez/ 19 Feb/ 20 Apr/ 20 Jun/ 20

Agriculture and livestock Energy

Industrial metals Precious metals0

10

20

30

40

50

60

70

80

Jan Feb Mar Apr May Jun Jul Aug

Spot price (August 11, 2020):USD 37.2


PresenterPresentation NotesThere was a widespread rally in commodity markets in July and early-August as a combination of bullish factors drove prices higher. First, the US$ tumbled in July – showing its largest monthly fall since 2010 – as US real yields on Treasuries fell to very low levels and confidence in the US currency was undermined by political fighting ahead of the US election and high and rising levels of Covid-19 cases. Other key drivers included a solid economic recovery in China, high levels of investor interest in commodities and challenges on the supply side as Latin America cut mine output. Gold and iron ore prices are both up another 13% m/m, while Brent is up 4% and most of the base metals were at least 5% higher m/m. Copper was a notable exception though and is down 1% m/m.

Travel & Tourism (direct spending of residents and non-residents % of GDP in 2019)


The fall in tourism is a key vulnerability for some countries in Sub-Saharan Africa

0

5

10

15

20

25

30

Source: World Bank, Munich Re Economic Research

PresenterPresentation NotesImpact of COVID-19 on tourism: fewer tourist arrivals mean lost export revenues from tourism due to lockdowns and travel restrictions


Sub-Saharan countries eased macroeconomic policies in response to the crisis, yet are constrained by vanishing fiscal space …

Policy rates (cumulative change since end 2019, in %)

Fiscal response (additional resources in % ofGDP)

Source: IMF (as of June 2020)

0

4

8

12

SSA EMs AEs

-3

-2.5

-2

-1.5

-1

-0.5

0

Sout

h Af

rica

Esw

atin

iTh

e G

ambi

aLe

soth

oM

ozam

biqu

eN

amib

iaZa

mbi

aSe

yche

lles

Sout

h Su

dan

Uga

nda

Gha

naD

RC

Mau

ritiu

sKe

nya

Gui

nea

Nig

eria

WAE

MU

Bots

wan

aR

wan

daC

EMAC 0

2

4

6

Nigeria Kenya Ghana Ethiopia Mauritius Senegal S' AfricaAdditional spending and forgone revenueLoans, equity, and guarantees


… and deteriorating financing conditions: capital outflows, a sharp widening of spreads and temporary shut outs from capital markets

Sub-Saharan Africa bond index spread(change in basis points relative to start)

Cumulative nonresident portfolio flows to emerging markets (% of 2020 GDP)

-1.5 -1 -0.5 0

Other EMs

South Africa

Ghana

Ivory Coast

Namibia

Kenya

Rwanda

Zambia

NigeriaMar - April 2020 Since April 2020

Source: IMF (June 2020)


Exchange rate risks and debt sustainability concerns as constantcompanions of the crisis, much-needed IMF/WB assistance

90

100

110

120

130

140

150

12/19 01/20 02/20 03/20 04/20 05/20 06/20 07/20INR RUB ZARBRL MXN MYR

0

50

100

150

200

250

300

Japa

nIta

lyU

SAAn

gola UK

Mau

ritiu

sSo

uth

Afric

aG

hana

Sene

gal

Ger

man

yKe

nya

Ethi

opia

Cot

e d'

Ivoi

reC

amer

oon

DC

RN

iger

ia

2019 2020

Exchange rates (per USD; Dec. 2019 = 100) Government debt (in % of GDP)

Source: Bloomberg (as of 12 August 2020)

Depreciation

PresenterPresentation NotesCountries receive IMF assistance and debt service relief


Good news: PMIs back in the green, but uncertainties linger and South Africa gives cause for concerns

SSA PMI’s expanded in July as expected, with activity benefitting from post lockdown domestic and external demand recovery

Labour markets, which remain under pressure, and rising infections may limit pace of normalization

GDP weighted Sub Saharan composite PMI Composite PMI

Source: IHS Markit, JP Morgan, Munich Re Economic Research

Improvement was broad-based, led by Kenya (easing of travel restrictions), Nigeria and Uganda

S’Africa

48.449.749.249.448.647.648.348.444.535.132.542.544.944.6


South Africa: The pandemic is evolving at a challenging time

-10

-5

0

5

2000 2005 2010 2015 2020e

30

35

40

45

50

55

2016 2017 2018 2019

Drivers of recession: Decline in external demand from Asia (already in Jan/Feb) and Europe (March), own nationwide lockdown end of March, current re-tightening of restrictions

Key sectors of the economy, such as mining, manufacturing and construction, were effectively halted, services set to join

Ongoing electricity supply issues Confidence of 12-month recovery from COVID19 crisis

below other Sub-Saharan countries Significant financing needs led to request for IMF support

COVID-19:Total confirmed cases per million people, still rising

Leading indicators: South African manufacturing PMI below 50 since mid 2019

GDP growth• Below potential in

last decade• Stagnation in 2019• Deep recession in

2020• Slow recovery• High risk for even

worse outcome

(real, in %)

Source: IHS Markit, Munich Re Economic Research

PresenterPresentation NotesIMF 27 July 2020

The pandemic is evolving in South Africa at a challenging time. With severe structural constraints to growth, economic activity has weakened over the last decade despite significant government spending, resulting in high unemployment, poverty, and income inequality. Like in other emerging economies, financial market volatility has increased during the pandemic, but the financial system is showing resilience.

Real GDP growth (q-t-q, in %, 4Q 2019 = 100)


Overall, Sub-Saharan Africa is expected to recover a bit faster thanother emerging / frontier regions, yet downside risks remain high …

80

90

100

110

120

130

140

2018Q1 2019Q1 2020Q1 2021Q1 2022Q1 2023Q1 2024Q1 2025Q1

Emerging Asia Latin America MENA Sub-Saharan Africa


driven by China


… and the crisis impact could wipe out almost 10 years of progress in development

Real GDP per capita (2000–20, index 2000 = 100)

Source: IMF

Almost 10 years ofprogress lost

The Great Reset? Do we have to expect paradigm shifts due to COVID-19? Can Sub-Saharan Africa benefit from a reset?

38

Global power shift?

Deglobalisation?

Restructuring of supply chains?

Digitalisation?

Climate policies?Larger role of governments?

Geopolitical tensions?


Distributional conflicts?

Financial stability?


Heike Wengert ([email protected])

Thank you very much for your attention!

mailto:[email protected]

COVID-19: Global Economic Outlook and Implications for Sub-Saharan AfricaAgendaCOVID-19: Global Economic OutlookThe world economy in 2020: From positive outlook to severe recession in just a couple of monthsGlobal outlook for 2020 has deteriorated at an unprecedented speed since mid March… but signs of stabilisation since MayEconomic policy uncertainty reached record levelsStock markets have seen a strong rebound after declines in March – investors looking forward to a recovery of the economy?Global economic activity hit a record low in April, contraction was still substantial in May, expansionary territory again in JulyLockdown-induced downturn strong in services, manufacturing hurt by supply chain disruptions and lack of demandExtent and speed of worldwide downturn in H1 2020 significantly exceeding developments during the global financial crisisAll major central banks have enacted unprecedented monetary stimulusEconomic policy is doing “whatever it takes” – G20 fiscal response dwarfs global financial crisis and still moves upShort-term work schemes limit unemployment spikes in Europe, US with extended unemployment assistance to support incomes�Fall in world trade projected to be in a similar magnitude as in 2009, export-oriented countries highly dependent on global recovery in tradeGlobal recovery in two stages: strong V-shaped rebound in the beginning, but more sluggish recovery afterwardsGlobal economic outlook: sharp recessions in 2020 and relatively slow recovery in many large economies in 2021 Under any plausible scenario, inflation in major economies will be very low in 2020 – longer-term outlook poses more uncertaintiesUS and European yields have fallen to new record lows, Treasuries below 1% for first time – safe haven flows continueImplications for Sub-Saharan AfricaThe COVID-19 outbreak has set off the first recession in Sub-Saharan Africa in 25 years, yet less severe than in other regions …… and wide variation between countries in Sub-Saharan AfricaCOVID-19: The economic impact may be more severe in emerging market economies as they are buffeted by additional pressure�Global vulnerability heatmap - Americas flashing red, Sub-Saharan Africa seems less vulnerable, except for South AfricaThe pandemic is still developing with regional differences highly relevant – Surge in Latin America, Africa less affected – so farSub-Saharan Africa benefits from a young population, relatively few people are over 60However, the scope for the pandemic to spread as aggressively as elsewhere remains a very real threat, especially in South AfricaMany African countries were quick to react to the pandemic, despite few cases; but economies cannot afford long lockdownsSub-Saharan countries dependent on commodity exports and tourism are hit mostCommodity markets: widespread rally recently, with demand (China) and supply factors playing a role, yet oil prices still far downThe fall in tourism is a key vulnerability for some countries in Sub-Saharan AfricaSub-Saharan countries eased macroeconomic policies in response to the crisis, yet are constrained by vanishing fiscal space …… and deteriorating financing conditions: capital outflows, a sharp widening of spreads and temporary shut outs from capital marketsExchange rate risks and debt sustainability concerns as constant companions of the crisis, much-needed IMF/WB assistanceGood news: PMIs back in the green, but uncertainties linger and South Africa gives cause for concernsSouth Africa: The pandemic is evolving at a challenging timeOverall, Sub-Saharan Africa is expected to recover a bit faster than other emerging / frontier regions, yet downside risks remain high …… and the crisis impact could wipe out almost 10 years of progress in developmentThe Great Reset? Do we have to expect paradigm shifts due to COVID-19? Can Sub-Saharan Africa benefit from a reset?Thank you very much for your attention!

covid-19: global economic outlook and implications for sub … · 2020. 8. 17. · covid-19 –...

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