A rebound to 3.3% of real GDP of Central African economies expected

A rebound to 3.3% of real GDP of Central African economies expected






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The real gross domestic product (GDP) growth of Central African economies is expected to rebound to 3.3% on average in 2021, mainly driven by higher oil prices. This forecast emerges from an executive summary of the Central Africa Economic Outlook 2021 Report of the African Development Bank (AfDB) published Tuesday by the financial institution. The success of the pandemic containment measures and the revival of the world economy should contribute to the resumption of activity in the CEMAC countries, the ADB report mentions. However, risks remain with the appearance of new variants of the coronavirus, the weak deployment of vaccination campaigns and security concerns, especially in Cameroon, the Central African Republic, Chad and the Democratic Republic of the Congo. To promote recovery, the report notes that it would be advisable to “strengthen the fiscal security cushions an increased mobilization of aid and / or domestic resources” and improve governance so that measures effectively target vulnerable populations. Resilience and impacts CEMAC could consider an exchange rate reform aimed at defining a system that promotes growth and adjustment in the face of shocks, underlines the African Development Bank. Covid-19 was expected to increase the number of poor people in the region by several million in 2020. Per capita income fell further (–5.6% in 2020 against –0.9% in 2019). The Covid-19 pandemic will have longer-term negative repercussions on human capital, given measures related to containment, school closings and reduced health care benefits, the report warns. Governments in Central Africa introduced several socio-economic measures after the onset of the pandemic. CEMAC countries and the DRC have taken stimulus measures equivalent to several percentage points of GDP, combining tax cuts and cash injections with public health and social sector spending. These measures have varied from country to country, depending on the political and economic environment. Only the DRC, with its flexible exchange rate system, resorted to its exchange rate in order to cope with the shock. In July 2020, the Bank of Central African States bought back public debt securities worth a total of 600 billion CFA francs ($ 1.04 billion). Despite potential risks, the regional outlook remains favorable for a post-Covid-19 recovery. Fiscal security Already plagued by security challenges and volatile oil prices before the pandemic struck, the region’s economies suffered significant shocks due to their dependence on oil exports. The decline in economic activity, combined with the drop in international demand for oil as a result of collapsing prices, has caused the region’s average growth rate to decline to 2.8%. in 2019 to –2.6% in 2020. The most affected countries were the Republic of Congo (–6.8%), Equatorial Guinea (–6.1%) and Gabon (–2.7%) . The Central African Republic was the only country to post positive growth in 2020, at 0.4%. The pandemic has further widened the budget and current account deficits of Central African countries. Then, the heavy dependence on oil revenues led to a contraction of budgetary resources of 4.6% of GDP on average, for the oil-exporting countries, and widened the current account deficit by more than 9% in Gabon and Equatorial Guinea. and Chad. The low growth in non-oil revenues in the CEMAC oil economies, as well as the low levels of resource mobilization in the Central African Republic and DRC, have led to inadequate “fiscal security cushions”. In addition, the region’s outstanding debt has increased from an average of 48% of GDP in 2019 to nearly 55% in 2020. However, Central Africa has benefited from significant external financing from emergency. Inflation has increased in several countries in the region, with the largest increase recorded in the DRC, where inflation reached 11.8% in 2020, due in particular to the macroeconomic policy in force and the weakness of the economy. national currency. Equatorial Guinea and Chad also recorded a slight increase in inflation. The Covid-19 pandemic has been contained with relative success in the Central Africa operational region, which includes the six member countries of the Economic and Monetary Community of Central African States (CEMAC): Cameroon, Gabon, Equatorial Guinea, Central African Republic, Republic of Congo and Chad and DRC. The cumulative total number of Covid-19-related deaths across the seven countries was around 2,953 at the end of June 2021. Covid-19 deaths in the region accounted for only 2.1% of all deaths recorded in Africa, the lowest rate of all African regions. With 1,320 and 916 deaths, respectively, as of June 27, 2021, Cameroon and the Democratic Republic of the Congo are the countries most affected by the pandemic. The Covid-19 has had a notable impact on all Central African countries, undermining economic growth. To curb the global crisis, regional policy dialogue should focus in particular on measures aimed at reducing poverty and promoting inclusive growth, the report concludes.

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