Sub-Saharan Africa Outlook subject to significant downside risks

LAGOS (Capital Markets in Africa) – The World Bank projected economic growth in Sub-Saharan Africa (SSA) to accelerate from 2.4% in 2017 to 3.2% in 2018 and to average 3.6% annually during the 2019-20 period, supported by an increase in commodity prices and stronger domestic demand. Still, it expected the region’s growth rate to remain below the pre-global financial crisis level, as Angola, Nigeria and South Africa, the region’s largest economies, continue to face challenges. It forecast Nigeria’s real GDP to pick up from 1% in 2017 to 2.5% in 2018, driven by higher oil production and improved non-hydrocarbon sector activity. It projected Angola’s real GDP to rise from 1.2% last year to 1.6% this year in case the successful political transition improves the investment climate.

In addition, the Bank expected economic activity in SSA’s oil exporters to accelerate from 1.5% in 2017 to 2.8% this year and to average 2.9% annually in the 2019-20 period, due to higher oil exports. It anticipated activity in SSA’s metal exporters to accelerate in 2018, supported by rising metals prices, declining inflation rates, easing in monetary policy and increased household demand. Also, it expected power generation in some of the region’s metal exporters to increase in case weather conditions improve, which would support private sector activity.

Furthermore, it projected growth in non-resource-intensive countries to expand at a solid pace, driven by strong public investment growth. In addition, it anticipated economic activity to remain solid in the economies of the West African Economic & Monetary Union, with Côte d’Ivoire and Senegal expanding at a fast pace. Also, it projected Ethiopia to remain the fastest-growing economy among East African countries, as it implements measures to stabilize its government debt level. It expected Kenya’s real GDP to recover due to a lower inflation rate, while it projected Tanzania’s growth to accelerate on strengthened investment growth.

In parallel, the Bank indicated that the regional outlook is subject to significant downside risks, which include tighter global financing conditions, slower-than-anticipated increase in commodity prices, heightened policy uncertainty in the U.S., weaker-than-expected growth in China, as well as an intensification of regional political and policy uncertainty and security tensions.