The widespread coronavirus has impacted most economies dramatically worldwide. Since its onset, it has taken a toll mostly on the economy of the African continent. As it is known to many, most countries in Africa are underdeveloped. The escalating COVID-19 cases brought many economic activities to a standstill. Therefore, the World Bank has called for immediate action on the virus by endorsing a fast vaccination process. This act could rescue 2021 from continuous economic imbalance.
The World Bank’s Global Economic Prospects report predicts that the economy would experience a 4% increase this year. This is despite the economy declining by 4.3% in 2020. In spite of the novel virus, the global economy has not plunged as many expected. This is because China, which happened to be the origin of the virus, recovered quickly. However, developing economies and baby businesses experienced a rather severe downfall.
Global economic reports reveal that this year might experience a more significant impact due to the unending virus. For instance, the Sub Saharan Africa activity plunged approximately by 3.7% last year, and many anticipate worse this year.
Impacts of Coronavirus on Economy
It is unfortunate that since the outbreak of the virus, dependency rates across the globe have increased. South Africa and Nigeria, which have the largest economies in Africa, also experienced a severe decline in their agricultural production the previous year. As such, both countries experienced a plunge in their per capita income. Therefore, millions of people from these countries now live in poverty. Meanwhile, many have also died amid battling the virus.
According to the report, about a quarter of the Sub Saharan African economies might experience a decline in their per capita income for a decade. Carmen Reinhart, the Vice President and Chief Economist of World Bank, stated the need to address financial crises in most vulnerable economies. In his statement, he said:
” Financial fragilities in many of these countries, as the growth shock impacts vulnerable household and business balance sheets, will also need to be addressed.”
Amidst the negative impact, economists forecast that this year, Sub Saharan Africa might grow at an average rate of 2%. However, this is way below the previous projection and is equivalent to zero per capita. Meanwhile, there is more hope with the positive news on vaccine development. In that emerging economies are hoping to resume normally with the discovery of a suitable vaccine. Therefore, the emergence of vaccine would result in pandemic control and speed global growth to about 5%.
To combat economic crises, policymakers should enact suitable reforms to ensure equitable and sustainable economic growth. The World Bank also stated that other than providing income support, the policymakers should major on growth-enhancing policies. By doing so, they minimize dependency levels as now people know how to develop compared to just relying on stimulus. World Bank also stated that developing economies needed to improve their health services, climate resilience, businesses, and governing practices. However, achieving the above might not be easy. This is because while seeking developments, the developing countries might get in debt.