Sub-Saharan Africa growth outlook subject to external and domestic risks

LAGOS (Capital Markets in Africa) – The World Bank projected economic growth in Sub-Saharan Africa (SSA) to accelerate from 2.6% in 2017 to 3.1% in 2018, relative to a previous forecast of 3.2% for 2018, supported by higher oil and metals production and prices, improved agricultural activity, increasing domestic demand, supportive external financial market conditions, as well as a pick-up in investment.

It expected growth in the SSA region to average 3.6% annually during the 2019-20 period on the back of a stronger recovery in economic activity in Angola, Nigeria and South Africa, the region’s largest economies. It forecast Angola’s real GDP to grow from 1.2% in 2017 to 1.7% this year, supported by a more efficient allocation of foreign currency, higher natural gas production and improved business sentiment. Also, it projected Nigeria’s real GDP to pick up from 0.8% last year to 2.1% in 2018, driven by higher oil output and improved non-hydrocarbon sector activity, but to remain subdued due to capacity and structural constraints.

In addition, the Bank expected economic activity in SSA’s oil exporters to accelerate from 1.5% in 2017 to 2.3% this year and to average 2.7% annually in the 2019-20 period, due to higher oil production. But it anticipated a slower recover y among oil exporters in the Central African Economic and Monetary Community, amid sustained fiscal consolidation efforts to stabilise their debt levels. Also, it expected rising mining output and improved metal prices to boost growth in some SSA metal exporters, while it anticipated economic activity in other countries to remain subdued as a result of high debt levels that continue to weigh on the private sector.

Further, it projected growth in non-resource intensive SSA countries to remain solid in the near term, supported by improving agricultural conditions, strong infrastructure investment, as well as higher household demand. Further, it considered that the region’s outlook is subject to significant external downside risks, such as tighter global financing conditions, unexpected capital outflows, a sharp decline in oil and metals prices and weaker-than-expected growth in China. It added that domestic risks include longer-than-expected droughts, delayed fiscal adjustment, weak implementation of structural reforms as well as an intensification of regional, political and security tensions.