African Economic Outlook 2022

Supporting Climate Resilience and a Just Energy Transition in Africa

2022

he release of the 2022 African Economic Outlook comes against a backdrop of two major global crises: the lingering COVID-19 pandemic and the Russia–Ukraine conflict. The latter erupted as Africa’s economy was on a path of recovery from the ravaging impact of the pandemic, and it threatens to set back the continent’s promising economic prospects. The continent risks sliding into stagflation —a combination of slow growth and high inflation. Real GDP is projected to grow by 4.1 percent in 2022, markedly lower than the near 7 percent in 2021. The deceleration in growth highlights the severity of the impact of the Russia–Ukraine conflict on Africa’s economy. 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 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. 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. The impact is, however, likely to be asymmetrical. On the one hand, net oil- and other commodity-exporting African countries could benefit from higher prices of their exported commodities. On the other, the impacts on net energy-, food-, and other commodity-importing countries, are concerning as higher food and energy prices will exacerbate inflationary pressures and constrain economic activity. Vulnerable pop- ulations, especially in urban areas, will bear the greatest burden of rising food and energy prices, and in the absence of measures to cushion the impact, this could stoke social tension across the continent.

English

African Development Bank

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