“Non-resident capital flows to SSA have grown dramatically over the last decade and increasingly consist of short-term instruments. As the region is now more integrated into global financial markets than ever before, and less reliant on concessionary funding, it is also more exposed to swings in global risk sentiment, commodity prices, currencies, and interest rates.”
“External deficits will likely persist despite significantly weaker domestic demand and import compression. Although SSA countries export a diverse range of commodities, prices for most major exports have fallen in recent months.”
“External pressure is rising markedly for Nigeria in the context of COVID-19. We project that the dramatic decline in oil prices since the beginning of the year—together with production limits under the OPEC+ agreement—will reduce goods exports by more than 40% in 2020. Despite significant import compression, we expect the current account deficit to remain sizeable.”
“As policymakers and the private sector financial community assess the immediate and potential longer-term financial, economic and social impact of COVID-19, we believe that the G20 DSSI is of great importance for vulnerable in-scope countries.”
“Unfortunately, the picture is different in emerging markets, where depreciating currencies and rising bond yields severely limit governments’ policy space. This is one reason a debate has begun whether EM central banks should pursue QE.”
“The COVID-19 shock is responsible for the most rapid global slowdown in economic activity on record, surpassing even the global financial crisis. Sub-Saharan Africa—until now the outlier in a world of increasing EM secular stagnation—will be impacted significantly in 2020.”
“The COVID-19-induced global recession, together with the economic effects of steps taken by the South African government to address the pandemic domestically, has made a challenging situation increasingly untenable. Persistently low growth and rising budgetary support for state-owned enterprises had led to a deteriorating debt sustainability outlook prior to the COVID-19 shock, which South Africa, as a result, entered in an already weak position”
“A $100 billion stimulus for sub-Saharan Africa to address the balance of payments shortfall would be around 5.9% of African GDP, similar to the global average, and would be only 3.6% of the global stimulus. Now is the time to protect African lives by investing in the health sector and keeping African economies afloat.”
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