Figure 1.33: Alternative Growth Scenarios in Sub-Saharan Africa, 2022–23

Upside Scenario In the upside scenario, a more rapid deployment of the vaccines would enable the lifting of social distancing and other containment measures by 2022Q3, about half a year faster than in the baseline. This would boost confidence, and consumer and investment spending would accelerate.

• In this scenario, real GDP in the region in 2022 could be raised by 1.6 percentage points higher than in the baseline in 2022 and 1.5 percentage points higher in 2023—the lower number reflecting the catch-up effect in 2023 as baseline COVID-19 restrictions ease. The economic impact of greater access to vaccines will vary across countries depending on the extent to which economic disruptions have already eased in 2021.

• In the East and Southern

Africa subregion, real GDP could be raised by 2.1 percentage points in 2022 and again by 2.1 percentage points in 2023, respectively, relative to the baseline.

• In West and Central Africa, the faster recovery would have a smaller impact on GDP (1 percentage point in 2022 and 0.9 percentage point in 2023), reflecting the greater extent to which COVID-19 disruptions have already eased in 2021.

FIGURE 1.33: Alternative Growth Scenarios in Sub-Saharan Africa, 2022–23 Faster vaccine

Real GDP (2019=100) 112 110 108 106 104 102 100 Sub-Saharan Africa

deployment would accelerate growth while lower vaccine delivery would disrupt economic activity in SubSaharan Africa.

98 96

2019 2020 2021 2022 2023 Downside Upside Baseline

Real GDP (2019=100) 112 110 108 106 104 102 100 98 96 West and Central Africa

2019 2020 2021 2022 2023 Downside Upside Baseline

Real GDP (2019=100) 112 110 108 106 104 102 100 98 96 East and Southern Africa

2019 2020 2021 2022 2023 Downside Upside Baseline

Source: World Bank staff projections. Note: The baseline scenario corresponds to the central forecast of the Macro-Poverty Outlook of October 2021. The alternative scenarios were generated using the World Bank’s MacroFiscal Model (MFMod). The numbers are generated based on specific assumptions about the inherently uncertain progress of COVID-19 and the policy responses to it. As such, they should be interpreted as illustrative rather than predictive.

1.6 POLICIES

The last issue of Africa’s Pulse argued that the speed of vaccine deployment and credible policy reforms to stimulate investment will be critical to improve the region’s growth outlook. Vaccine inequity across the world is dangerously leading to an increasing divergence in health and economic outcomes. Growth in the region in 2021 is estimated at 3.3 percent, with projections for 2022 and 2023 to remain below 4 percent. Compared with advanced countries, the stimulus provided by countries in the region is significantly smaller. Therefore, more resources are needed to mitigate the effects of the pandemic and launch a sustainable and inclusive growth recovery program. Climate change adds to the developmental challenges already faced by the region. It also provides opportunities to build back better and greener.

More Financing Needed to Counter the Pandemic and Launch a Sustainable Recovery Sub-Saharan African countries responded swiftly to the COVID-19 pandemic in 2020. They implemented a wide array of public health and containment measures to prevent further spread of the coronavirus. At the same time, governments in the region implemented a series of monetary, fiscal, and financial policies to protect the lives and livelihoods of their population— notably, the poor and those who are vulnerable to poverty. The size of the fiscal support measures deployed by Sub-Saharan African governments has been very small compared with those in advanced economies and emerging markets. For instance, the budgetary support to the economy in response to the pandemic since January 2020 amounted, on average, to 2.8 percent of GDP in Sub-Saharan Africa, while the average size of the stimulus represented 17.3 percent of GDP in advanced economies and 4.1 percent in emerging market economies (figure 1.34).18

The size of the stimulus masks the wide heterogeneity in budget support across African countries. Although the size of the fiscal support of all African countries was smaller than the average of advanced countries, in eight countries in the region, budget support measures exceeded 5 percent of GDP. The fiscal measures deployed in Mauritius and the Seychelles, which are small island countries that are highly dependent on tourism activities, amounted to 9.2 and 6.6 percent of GDP, respectively. In South Africa, the budget support in response to COVID-19 was nearly 6 percent. Still, these packages paled in comparison with the amount of additional spending and forgone revenues in the United States (25.4 percent of GDP) and France (9.6 percent of GDP), as well as emerging markets such as Brazil (9.2 percent of GDP) and Thailand (11.4 percent of GDP).

African countries have been relatively disciplined on monetary and fiscal policies. Inflation rates have remained relatively under control across countries in the region. For instance, about three-quarters of the countries with available data (35 of 47) had single-digit average rates of consumer price inflation in 2020, and the number of countries is estimated to increase to 38 in

18 The budget support reported here excludes off-budget measures such as equity injections, asset purchases, loans, guarantees (on loans, deposits, and so forth), and quasi-fiscal operations, among others. Only 20 of the 47 countries reporting data for the region conducted such operations. The median liquidity support by Sub-Saharan African countries represented only 0.2 percent of GDP.