FocusEconomics: Growth in Sub-Saharan Africa Set to Hit 4-year High

Infograph of SSA

May 24, 2018//-The recovery in Sub-Saharan Africa’s (SSA) economy is expected to gain steam this year, thanks to stronger growth in major players Nigeria and South Africa, according to FocusEconomics, a leading provider of economic analysis and forecasts for 127 countries  in Africa, Asia, Europe and the Americas.

 In its June 2018 estimate released this month, it attributed firmer commodity prices and healthy foreign demand as the drivers of the region’s stronger growth.

Although several challenges to the outlook exist, including high debt, large imbalances and vulnerability to fluctuations in the global financial market, economists at FocusEconomics see regional GDP expanding 3.5% in 2018, unchanged from last month’s forecast.

“In 2019, growth is seen accelerating to 3.7%. This month’s stable outlook for the region was driven by unchanged projections for nine of the SSA region’s 13 economies, including Ghana, Kenya and Nigeria”, the report added.

Three economies saw their forecasts lifted, including South Africa, while Mozambique was the only economy to have its forecast downgraded.

Ethiopia’s economy is expected to be the best performer in SSA this year, with 8.1% growth, followed by Ghana (7.3%) and Côte d’Ivoire (7.1%).

Ethiopia’s economy is expected to be the best performer in SSA this year, with 8.1% growth, followed by Ghana (7.3%) and Côte d’Ivoire (7.1%).

Available data for the start of 2018 suggests that growth continued to improve. The Consensus Forecast is for GDP to expand 3.4% annually in the first half of the year.

Higher oil prices and improved FX allocation should support growth in Nigeria, while Cyril Ramaphosa’s presidency has helped revive confidence in South Africa, the report said.

Growth is also projected to have picked up in Kenya thanks to a calmer political scene and improved conditions in the agricultural sector.

Meanwhile, incoming data suggests that Ghana’s economy is still growing at a marked pace, albeit down from last year’s multi-year high.

On the other hand, the region’s major players are expected to be the slowest growing economies. Angola’s economy is seen growing 1.9%, South Africa’s economy is seen expanding 2.0% and Nigeria’s GDP is projected to increase 2.6%.

New revelation 

A more comprehensive set of data revealed that SSA economy ended 2017 on a weaker note than previously expected. Regional GDP increased 2.7% year-on-year in the final quarter of last year, below last month’s preliminary estimate of a 3.0% expansion.

In addition, the region’s third quarter performance was revised down from the 3.0% increase estimated last month to a more subdued 2.4% expansion.

The large downward revisions were mainly due to the inclusion of new quarterly national accounts data for Angola, which released quarterly figures for the first time in May.

Along with the new quarterly figures, Angola’s Statistical Institute also made large downward revisions to GDP data for the past two years.

While previous figures stated that the economy grew modestly in 2016–2017, new data exposed a long and unexpected recession, suggesting that economic conditions have been more challenging than previously thought.

The strong downward revision to the earlier figures was chiefly due to changes in results for manufacturing output and public spending. Elsewhere in the region, the growth story remains unchanged, and regional activity picked up modestly overall in the fourth quarter of 2017 thanks to higher commodity prices, solid global growth and sound harvests.

African Eye Report

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