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Slight Economic Growth for Sub Saharan Africa in 2018/19

Publishing Date : 08 October, 2018


The World Bank has projected an average growth rate of 2.7 percent for Sub-Saharan African economies in the year 2018. This information is contained in the October 2018 issue of Africa’s Pulse report, a bi-annual publication of the Office of the Chief Economist in the World Bank Africa Region.

The document analyses the short term economic prospects for the continent and current development challenges, as well as a special development topic. According to the report Sub-Saharan African economies are still recovering from the slowdown in 2015-16, but growth is slower than expected, the average growth rate estimation of 2.7 percent mirrors a slight increase from 2.3 percent in 2017. “The region’s economic recovery is in progress but at a slower pace than expected,” observes World Bank Chief Economist for Africa Albert Zeufack.

According to Zeufack to accelerate and sustain an inclusive growth momentum, policy makers must continue to focus on investments that foster human capital, reduce resource misallocation and boost productivity. “Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt,” he said.

The World Bank further highlights that the slow growth is partially a reflection of a less favourable external environment for the region. Global trade and industrial activity lost momentum, as metals and agricultural prices fell due to concerns about trade tariffs and weakening demand prospects.

“While oil prices are likely to be on an upward trend into 2019, metals prices may remain subdued amid muted demand, particularly in China,” explains the 2018 Africa Pulse adding that financial market pressures intensified in some emerging markets and concern about their dollar-denominated debt has risen amid a stronger US dollar.

The slower pace of the recovery in Sub-Saharan Africa of 0.4 percentage points lower than the April forecast is explained by the sluggish expansion in the region’s three largest economies, Nigeria, Angola, and South Africa. Lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture. Growth in the region - excluding Angola, Nigeria and South Africa - was steady.

The World Banks says several oil exporters in Central Africa were assisted by higher oil prices and an increase in oil production. “Economic activity remained solid in the fast-growing non-resource-rich countries, such as Côte d’Ivoire, Kenya, and Rwanda, supported by agricultural production and services on the production side, and household consumption and public investment on the demand side” reports Albert Zeufack Office.

Furthermore the sub Saharan African economic review suggests that Public debt remained high and continues to rise in some countries. “Vulnerability to weaker currencies and rising interest rates associated with the changing composition of debt may put the region’s public debt sustainability further at risk,” says Zeufack World Bank Chief Economist for Africa Region. Zeufack further notes that other domestic risks include fiscal slippage, conflicts, and weather shocks.

“Consequently, policies and reforms are needed, to strengthen resilience to risks and raise medium-term potential growth” he said “Reforms should include policies which encourage investments in non-resource sectors, generate jobs and improve the efficiency of firms and workers,” added Cesar Calderon, Lead Economist and Lead author of the report.

Growth in the region is projected to increase from 2.7 percent in 2018 to 3.3 percent in 2019, rising to 3.6 percent in 2020, slightly below April forecasts. The recovery is set to continue amid a more challenging external environment, including moderating economic growth among the region’s main trading partners, a stronger U.S. dollar, heightened trade policy uncertainty, and tightening global financial conditions.

Against this backdrop, growth may be supported by a modest uptick in oil prices, the easing of drought conditions that had depressed agricultural output, and a rise in domestic demand as policy uncertainty of the past year recedes and investment rises.



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