(Bloomberg) — Sub-Saharan Africa will probably reverse an economic contraction next year as countries in the region begin to ease movement restrictions, even as the impact of the coronavirus will endure for years to come, according to the World Bank.



a person standing in front of a fruit stand: A vendor wearing a protective face mask walks by bags of beans and pulses for sale at Toi market in Nairobi, Kenya, on Tuesday, May 26, 2020. Kenya plans to spend 53.7 billion shillings ($503 million) on a stimulus package to support businesses that have been hit by the coronavirus pandemic, according to the National Treasury.


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A vendor wearing a protective face mask walks by bags of beans and pulses for sale at Toi market in Nairobi, Kenya, on Tuesday, May 26, 2020. Kenya plans to spend 53.7 billion shillings ($503 million) on a stimulus package to support businesses that have been hit by the coronavirus pandemic, according to the National Treasury.

The pandemic has put “a decade of hard-won economic progress at risk,” the Washington-based lender said Thursday in its outlook for the region. As many as 40 million people could be pushed into extreme poverty, erasing five years of gains fighting poverty, the bank said.

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Sub-Saharan Africa’s gross domestic product is on track to shrink 3.3% this year, its worst performance on record, due to the combined effects of the disease and lower oil and commodities prices. Growth of about 2.1% could follow in 2021 and 3.2% in 2022, the bank said.

Still, the fallout of the pandemic remains hard to predict.

The lender’s baseline scenario assumes that the number of new infections will continue to slow and that fresh outbreaks won’t result in new lockdowns. If the outbreak is more prolonged or if there’s a second wave, sub-Saharan Africa’s economy may expand by only 1.2% in 2021 and 2.1% in 2022. By the end of 2021, the region’s real per-capita GDP may have regressed to 2007 levels, according to the report.

The region will lose at least $115 billion in output this year and long-term losses are expected “with the level of real per-capita GDP expected to contract by

By Padraic Halpin

DUBLIN, Oct 9 (Reuters)Ireland’s budget deficit is set to hit 6.1% of gross domestic product this year, Finance Minister Paschal Donohoe said on Friday, a narrower than forecast shortfall likely to give him room for more generous measures in Tuesday’s budget.

The government will look to support those hit hardest by COVID-19 restrictions in the budget for 2021, helped by state tax revenues having held up much better than expected and Ireland’s big export sector limiting the economic damage.

The finance ministry estimated early in the pandemic that a big fall in tax receipts and a huge increase in spending could lead to a deficit of 23 to 30 billion euros or between 7.4% to 10% of GDP.

Donohoe said the deficit would reach 21 billion euros, provided current COVID-19 restrictions were not tightened. A no-policy-change estimated deficit of 14 billion euros or 4% of GDP for 2021 will be updated next week when the government announces its budget stimulus measures.

“I want to emphasise that these figures are subject to an unprecedented degree of uncertainty with potential further change within 2020 and clearly the potential for significant change in 2021,” Donohoe told a news conference.

Next week’s budget figures will include a scenario outlining the impact of tougher restrictions to contain the novel coronavirus, he said. The government rejected a recommendation by its health chiefs to enter a second national lockdown on Monday.

In updated forecasts on Friday, Donohoe’s department expects to collect 18% more income tax than when they revised them down sharply in April, keeping the year-on-year decline in the overall tax take to 4% versus the 16% initially feared.

Bucking the trend in most tax categories, corporate receipts are forecast to jump by 14% year-on-year to hit a record 12.4

Brazil’s economy is set to shrink by 5.8 percent in 2020, the International Monetary Fund said Monday, revising up an earlier forecast but warning the country faced “excpetionally high” risks.

“The economy is projected to shrink by 5.8 percent in 2020, followed by a partial recovery to 2.8 percent in 2021,” the IMF said in its annual report on Latin America’s largest economy.

The report released Monday revised upwards the more pessimistic forecast of a 9.1 percent contraction in June.

Aerial view showing factories at the Manaus Duty Free Zone (ZFM), Amazonas state, Brazil, in September 2020 Aerial view showing factories at the Manaus Duty Free Zone (ZFM), Amazonas state, Brazil, in September 2020 Photo: AFP / Michael DANTAS

It praised the right-wing government of President Jair Bolsonaro for its “swift and substantial” response to the economic crisis prompted by the coronavirus pandemic.

The government increased health spending, boosted financial support for state governments, extended state-backed credit lines and introduced employment retention schemes, which helped protect formal jobs during lockdown.

“The strong policy response averted a deeper economic downturn, stabilized financial markets, and cushioned the effects of the pandemic on the poor and vulnerable.”

A man holds his Brazilian working document during a weekly job fair in Rio de Janeiro in June 2019 A man holds his Brazilian working document during a weekly job fair in Rio de Janeiro in June 2019 Photo: AFP / MAURO PIMENTEL

However, it warned that given a sharp rise in primary fiscal deficit, gross public debt is projected to jump to around 100 percent of GDP in 2020, remaining high over the medium term.

An excavator pushes earth over coffins at a mass grave at the Nossa Senhora cemetary in Manaus, Amazon state, Brazil in September 2020 An excavator pushes earth over coffins at a mass grave at the Nossa Senhora cemetary in Manaus, Amazon state, Brazil in September 2020 Photo: AFP / MICHAEL DANTAS

“Risks are exceptionally high and multifaceted,” the Fund warned, “including a second wave of the pandemic, long-term scarring from a protracted recession, and vulnerability to confidence shocks given Brazil’s high level of public debt.”

The South American giant

LONDON (Reuters) – Britain suffered a record collapse in economic output in the second quarter of 2020 when COVID-19 lockdown measures were in force and people had few opportunities to spend, though the decline was slightly smaller than first estimated.

Gross domestic product shrank by 19.8% in the three months to June compared with the first quarter, slightly less than the initial 20.4% estimate but still more than any other major advanced economy, the Office for National Statistics said.

The fall was the biggest since the ONS records began in 1955. Other data has suggested Britain is on course for its biggest annual fall since the 1920s.

Britain’s economy had already shrunk by 2.5% in the January-March period as the country entered lockdown in late March.

Households saved a record 29.1% of their income in the second quarter, up from 9.6% in the first quarter, as their ability to spend in shops and restaurants were sharply curtailed during lockdown, while incomes were supported by a government job programme which ends next month.

“So far the economic data has proved better than the Bank of England initial assumptions, but with COVID-19 cases returning and restrictions increasing, that could soon reverse,” Jon Hudson, a fund manager at Premier Miton, said.

Britain has suffered Europe’s highest death toll from COVID-19, with more than 42,000 fatalities.

Comparing output in the second quarter with its level a year earlier, British gross domestic product is down by 21.5% – the same as in Spain – while France reported a 19.0% decline.

Britain’s economy has rebounded sharply since the lockdown began to ease from May onwards, and Bank of England Governor Andrew Bailey said on Tuesday that he expected the economy would show an annual decline of 7-10% in the third quarter.

By Giuseppe Fonte and Gavin Jones

ROME, Sept 29 (Reuters)Italy forecasts that its economy will contract by 9.0% this year, the Treasury said on Tuesday, while the budget deficit will come in at 10.8% of gross domestic product.

The 9% GDP contraction is a downward revision from a target of -8% set in April, while the 10.8% deficit now expected is a reduction from a goal of 11.9% set just last month.

The new targets were agreed at a meeting of the ruling parties on Tuesday, the Treasury said in a statement, and will be formalised in the government’s Economic and Financial Document (DEF) to be approved by the cabinet this week.

The DEF will be sent to the European Commission for approval and form the framework for Rome’s 2021 budget to be presented next month.

The coalition, led by the anti-establishment 5-Star Movement and the centre-left Democratic Party (PD), has been adjusting its economic and public finance targets since Italy was struck hard by the coronavirus pandemic in late February.

The DEF will target growth to rebound to a positive 6.0% next year, when the budget deficit will decline to 7.0% of GDP, the Treasury said.

The 7% deficit next year is a hike compared with a 5.7% target set in April, reflecting extra spending pencilled in by the government to help shake off its steepest recession since World War Two.

Expansionary measures in 2021, financed by extra borrowing and money from the EU’s Recovery Fund to help countries hardest-hit by COVID-19, will total some 40 billion euros ($47 billion), Economy Minister Roberto Gualtieri said in a televised interview on Tuesday.

Italy’s public debt, proportionally the highest in the euro zone after Greece’s, will be targeted at 158.0% of GDP this year, up marginally from 157.6%