Abuja — Africa could suffer a permanent economic hit if tensions splinter the global economy into opposing trading blocs around the US and China, the International Monetary Fund (IMF) has said.
“If geopolitical tensions were to escalate, countries could be hit by higher import prices or even lose access to key export markets — about half of the region’s value of international trade could be impacted,” the IMF wrote in an essay.
It estimated that sub-Saharan Africa could see a 4 per cent decline in gross domestic product after 10 years under a severe version of this bipolar world, according to a Bloomberg report.
Matters could be made worse if capital flows are also affected, which would do lasting harm to long-term economic development. The report estimated that foreign direct investment into the region could potentially fall by as much as $10 billion.