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

Kohnert, Dirk (2022): The impact of the energy-induced EU recession on Sub-Saharan Africa.

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.

• Item Type: MPRA Paper
• Language: English
• 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
• Subjects: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; D - Microeconomics > D6 - Welfare Economics > D62 - Externalities; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E26 - Informal Economy ; Underground Economy; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F2 - International Factor Movements and International Business > F22 - International Migration; F - International Economics > F3 - International Finance > F35 - Foreign Aid; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F51 - International Conflicts ; Negotiations ; Sanctions; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F54 - Colonialism ; Imperialism ; Postcolonialism; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N17 - Africa ; Oceania; N - Economic History > N4 - Government, War, Law, International Relations, and Regulation > N47 - Africa ; Oceania; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P26 - Political Economy ; Property Rights; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification

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