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The World Bank says global headwinds are slowing Africa’s economic growth as countries continue to contend with rising inflation, hindering progress on poverty reduction.
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The institution said the risk of stagflation comes at a time when high interest rates and debt are forcing governments to make difficult choices in order to protect jobs, purchasing power and development gains.
The findings are contained in the World Bank’s latest Africa’s Pulse, a biannual analysis of the near-term regional macroeconomic outlook.
The growth in Sub-Saharan Africa (SSA) is expected to decelerate from 4.1% in 2021 to 3.3% in 2022, due to slowdown in global growth, including flagging demand from China for commodities produced in Africa.
Additionally, the Russia-Ukraine war is worsening already high inflation and weighing on economic activity by depressing both business investments and household consumption.
The report noted that 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.
World Bank Chief Economist for Africa, Andrew Dabalen said the trends compromise poverty reduction efforts that had been slowed by the impact of the COVID-19 pandemic.
“What is most worrisome is the impact of high food prices on people struggling to feed their families, threatening long-term human development.”
Dabalen called for urgent action from policymakers to restore macro-economic stability, support poor families and reorient food and agriculture spending to achieve future resilience.
The report further highlights how elevated food prices are causing hardships with severe consequences in one of the world’s most food-insecure regions.
According to the Global Report on Food Crises 2022 Mid-Year Update, over one in five people in Africa suffer from hunger; about 140 million people faced acute food insecurity in 2022.
