Africa growth forecasts cut as World Bank warns of stagflation and food insecurity

The World Bank’s latest forecasts were detailed in its bi-annual Africa’s Pulse report, and a few words stand out. One is stagflation, which refers to a dismal mix of low growth and soaring inflation. The others are war and Ukraine, as Russia’s war is a key reason for rising hardship in the world’s poorest continent. 

“Global headwinds are slowing Africa’s economic growth as countries continue to contend with rising inflation, hindering progress on poverty reduction. The risk of stagflation comes at a time when high interest rates and debt are forcing African governments to make difficult choices as they try to protect people’s jobs, purchasing power and development gains,” the  Washington-based lender said.

“Economic growth in Sub-Saharan Africa (SSA) is expected to slow to 3.3 percent in 2022 ... a downward revision of 0.3 percentage point from the April 2022 Africa’s Pulse forecast. The downward revision is on the back of multiple shocks,” it said. 

Inflation is a key threat and the blame for that partly lies with the Kremlin. 

“The war in Ukraine is exacerbating already high inflation and weighing on economic activity by depressing both business investments and household consumption. As of July 2022, 29 of 33 countries in SSA with available information had inflation rates over 5%, while 17 countries had double-digit inflation,” the World Bank said.  

Visit Daily Maverick’s home page for more news, analysis and investigations

Growing hunger and inequality are among the bitter consequences being reaped from this harvest of sorrow. 

“The number of people facing severe food insecurity in Sub-Saharan Africa has increased sharply, with more than one in five people facing hunger and more than a quarter billion people being undernourished. Food security crises are becoming more frequent and more acute. About 140 million people are estimated to be acutely food insecure in the region in 2022, up from 120 million in 2021,” the World Bank said.

“The gap between rich and poor has widened further with the war in Ukraine as commodity prices jumped and reinforced the lingering adverse effects of the pandemic. Lack of adequate social protection and feeble per capita income growth constitute major vulnerabilities for the poor,” it said.

The World Bank also noted divergent economic performances across the region, with the economies in west and central Africa seen as expanding by 3.7% this year compared with 3.0% in east and southern Africa.

South Africa of course is an underachiever.

“The South African economy is projected to weaken further as structural constraints and headwinds persist throughout the forecasting period,” the World Bank said. “Growth will be down to 1.4 percent in 2023, from 1.9 percent [in 2022], and will rebound to 1.8 percent in 2024.” 

With rolling blackouts ramping up to unprecedented levels with no end in sight, and the prospect of things getting even worse, even those bleak forecasts look optimistic. One thing is certain: South Africa is no longer an engine of growth for the rest of the continent. DM/BM