Goldman Sachs predicts sub-Saharan Africa would need $75 billion to battle COVID-19

Goldman Sachs predicts sub-Saharan Africa would need $75 billion to battle COVID-19

- Research by an investment firm, Goldman Sachs, shows that sub-Saharan African countries would need about $75 billion to restore their economies

- The report showed that the effect of the coronavirus outbreak could greatly impact already stretched fiscal balances

- It added that there could be a probable rise in budget deficits from an average of around 3.5% to high single digits

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Investment firm, Goldman Sachs, has predicted that sub-Saharan Africa would require about $75 billion to meet its funding needs as the coronavirus continues to affect economies all over the world.

The firm is convinced that the most severe impact of the crisis will be on already stretched fiscal balances.

The report added that there is a likelihood of a rise in budget deficits from an average of around 3.5% to high single digits.

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This could become the reality even before any measures to soften the economic effects of the coronavirus takes place, a Bloomberg report shows.

The report went on to say that there could be a higher financial gap if measures such as tax cuts that some governments, including Kenya’s, have already announced, are included.

Goldman Sachs added that a combination of lockdowns to contain the spread of the virus and lower revenues from exports and tourism will be severe enough to trigger the region’s first full-year recession since 1991.

The report showed that Angola and Zambia may be among the hardest-hit countries, with their economies shrinking by as much as 9% in 2020.

The analysis further revealed that South Africa’s output will probably decrease by 6% and Nigeria’s by 4%.

Outputs from Ghana, Mozambique and Senegal will also contract if the shutdowns end up being “heavy”, the reported stated.

Meanwhile, a new World Bank report shows that sub-Saharan Africa is likely to record its first recession in 25 years.

The observation comes at a time when the coronavirus has slowed down economic activities and disrupted trade all over the world.

The report shows that the region’s Gross Domestic Product (GDP) is likely to contract between 2.1% and 5.1% in 2020; economic growth was 2.4% in the year 2019.

Per a report by Bloomberg, the statement added that the outbreak is testing the limits of societies and economies around the world.

READ ALSO: Africa could lose $270 billion due to COVID-19 - Fresh AU report

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Source: Yen

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