African Development Bank: Libyan economy is the most degraded in North Africa in 2020

North Africa’s GDP growth is significantly negative in 2020 at -1.1%, down -5.1 percentage points from 2019, according to the African Development Bank’s 2021 Economic Outlook for North Africa.

According to the report, North African economies experienced three shocks in 2020, namely the coronavirus andemia, the collapse in oil prices and the sharp drop in tourism. However, these losses were less severe than expected, owing to rapid interventions by governments to mitigate the effects of the pandemic.

The Libyan economy was the most affected in 2020 among the economies of North Africa, declining by -60.3%, while the Tunisian economy shrank by -8.8%, Morocco by -7, 1%, Algeria -4.6% and Mauritania -3.6%.

On the other hand, Egypt has managed to achieve positive growth of + 3.6%, and it is one of the few countries in the world to achieve this in 2020.

The report says the coronavirus pandemic has dramatically reduced the resilience of North African countries. The crisis also resulted in a significant consumption of the state’s financial liquidity, at a time when oil-exporting countries faced a double impact resulting from closures and sharp fluctuations in the oil market, especially in Libya.

The report concludes that if the pandemic continues into 2022 and beyond, it is likely that some countries will face liquidity problems to repay their debts. The financing needs of North African countries during the period 2021-2023 are estimated to exceed $ 180 billion to adequately respond to the crisis.

In the short term, the report suggests various measures to manage the damage. The African Development Bank has recommended the importance of reducing the coronavirus pandemic, supporting vulnerable populations, overcoming vaccine challenges and building debt resilience.

Some of the medium-term proposals included supporting small and medium-sized enterprises and improving local resources. While economic diversification and export diversification require long-term attention, as well as investments in public goods to alleviate regional disparities and promote inclusive growth. In addition to deepening regional integration within the framework of the African Free Trade Agreement.

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