The impact of the energy-induced EU recession on Sub-Saharan Africa

Dirk Kohnert

MPRA Paper from University Library of Munich, Germany

Abstract: The EU is one of the three largest economies in the world. But its economy, which is still suffering from the cCOVID-19 pandemic and the negative effects of the Russian war in Ukraine, faces a bleak outlook. Inflation, or even stagflation, is a major concern as it reflects cost pressures from disrupted supply chains and tight labor markets. The war in Ukraine could also lead to a sustained stop in European gas supplies from Russia. Fitch Ratings therefore forecast the likelihood of a technical recession in the euro zone due to ongoing gas rationing. Apparently the EU is at the mercy of two unpredictable powers, Putin and the weather. China is also affected by global imbalances, and when China coughs, Europe catches the flu. However, the risks are greatest in sub-Saharan Africa. Its global growth spillovers come mainly from the EU and the BRICS countries. In addition to its strong demographic growth, the continent is already suffering from climate change, including prolonged droughts, and political destabilization, particularly in the Sahel, Horn of Africa and East Africa. The two major African powers, Nigeria and South Africa, are currently going through major socioeconomic crises. Many sub-Saharan African countries are heavily dependent on energy and food imports, particularly wheat from Russia and Ukraine. For the approximately 30 million African poor, this means an increase in inequality. A recession in Europe would amplify external pressures and growth challenges. In addition, the emerging sub-Saharan markets bear the greatest export risk to the EU. The debt problem is also looming again, because lower global commodity prices slowed down economic growth.

Keywords: EU; recession; Russo-Ukrainian War; COVID-19 pandemic in Africa; Sub-Saharan Africa; economic development; human development; informal sector; poverty; famine; international trade; food crises; global power; fragile states; Nigeria; South Africa; Postcolonialism; African Studies (search for similar items in EconPapers)
JEL-codes: D31 D62 E24 E26 F13 F22 F35 F51 F54 N17 N47 O15 O17 P26 Z13 (search for similar items in EconPapers)
Date: 2022-08-07
New Economics Papers: this item is included in nep-agr, nep-cis and nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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