According to the estimates of these two authors, in a severe scenario, the economies of sub-Saharan Africa could suffer a permanent decline of up to 4% of real gross domestic product after 10 years, "losses greater than many countries experienced during the global financial crisis".
They add that economic and trade alliances with new partners, mainly China, have benefited the region, "but also made countries dependent on food and energy imports more susceptible to global shocks, including disruptions to increased trade restrictions after the invasion of Ukraine for Russia".
“If geopolitical tensions escalate, countries could be hit by higher import prices or even lose access to key export markets – around half of the region's international trade value could be affected,” they say.
Losses could be compounded if capital flows between trading blocs are disrupted due to geopolitical tensions. The region stands to lose about $10 billion in foreign direct investment (FDI) and official development assistance flows, which represents about half a percent of GDP per year (based on a 2017–19 average estimate). Long-term FDI reductions could also undermine much-needed technology transfer.
For countries seeking to restructure their debt, deepening geo-economic fragmentation can also worsen coordination problems among creditors.
"The region would do better if the States and the European Union cut relations with Russia, and the countries of sub-Saharan Africa continued to trade freely", they say, adding that in this scenario - called "strategic decoupling" - trade flows would be diverted towards the rest of the world, creating opportunities for new partnerships and possibly boosting intra-regional trade.
"As some African countries benefit from access to new export markets and cheaper imports, the region as a whole would not suffer a loss of GDP. The oil exporters that supply energy to Europe may even gain", they point out.
