“Member States will stagnate and teeter on the brink of recession in 2023” AUDA warns


AUDA-NEPAD CEO Mrs Nardon Bekele-Thomas briefing PAP Plenary on the agency’s contribution to Africa’s economic recovery. Image courtesy of Pan-African Parliament media

AUDA-NEPAD CEO Dr. Nardos Bekele-Thomas presented a bleak statement on the state of Africa’s economic recovery post-COVID-19 pandemic. Addressing the Pan-African Parliament Plenary during the Sitting of the Permanent Committees of the sixth Parliament in Midrand, South Africa, Mrs. Bekele-Thomas warned that some Member States will stagnate and teeter on the brink of recession in 2023.

African countries, as reported by the agency, are seeing an increase in economic vulnerability with higher government debt, inflationary pressure, and tighter monetary policies.

“Following a recovery in 2021 after the shock of the COVID-19 pandemic, African economies took a knock, but they remain flexible with a solid outlook…and according to the Economist Intelligence Unit, almost all countries in Africa continue to grow, although real GDP growth rates will vary considerably across the region and some Member States will stagnate and teeter on the brink of recession,” said Dr Nardos Bekele-Thomas.

The agency also reported that tourism-dependent economies which had grown by 6.3 percent in 2022 after the easing of COVID-19 pandemic risks, will drop to 5.1 percent in 2023 in light of rising inflation in tourism-source markets

According to the statement, there are indications of growth, with projections from the African Development Bank reporting Real GDP stabilizing at a 4% average. However, this state can only be achievable through continued policy support in Africa and global efforts to mitigate the impact of external shocks and rising uncertainty, reported Dr. Bekele Thomas.

Speaking on external shocks and rising uncertainty hindering Africa’s economic recovery post-COVID-19, Dr. Bekele-Thomas mentioned an array of challenges that still plague African Union member states’ economies.

“The slowdown in economic growth has been due to a number of factors, including the growing impacts of climate change, the spillover effects of rising geopolitical tensions and insecurity on the continent, and the Russia-Ukraine conflict. These shocks have had adverse effects on African economies resulting in substantial volatility in global financial markets, fuelled inflationary pressures, increased costs of capital and debt servicing, disrupted global supply chains (especially in food and energy markets), and decreased demand in major export markets, especially in Europe and China, Africa’s main trading partners,” said the CEO.

A major point of concern presented to the continental parliament was the rising impact of Climate Change on Africa’s food and nutrition security, stating that a combination of challenges already facing African countries post-COVID-19 cook up a perfect storm.

Mrs. Bekele-Thomas said to African legislators, “as the impacts of climate change continue to intensify and global shocks upend business as usual, Sub-Saharan Africa is feeling the brunt of what has been coined the perfect storm — a food, fuel, and fertilizer crisis exacerbated by the war in Ukraine, scarring effects from the COVID-19 pandemic, soaring inflation, rising debt, and extreme weather”.

The agency outlined with concern the extent of the natural and man-made crises that are currently hindering affected member states economic growth. “Climate change is intensifying food insecurity across sub-Saharan Africa, where Russia’s war in Ukraine and the pandemic are also adding to food shortages and high prices. Climate events, which destroy crops and disrupt food transport, are disproportionately common in the region. One-third of the world’s droughts occur in Sub-Saharan Africa, and Ethiopia and Kenya are enduring one of the worst in at least four decades”.

The human cost of climate change is being felt in countries such as Chad and Uganda, struggling economies that are also severely impacted by torrential rains and floods. The agency accounted for the human cost of climate change on the economy, which is the rise in poverty and other cascading macroeconomic effects, including slower economic growth.

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