The World Bank says Sub-Saharan African economies are still recovering from the slowdown in 2015-16, but growth is slower than expected. The average growth rate in the region is estimated at 2.7 percent in 2018, which represents a slight increase from 2.3 percent in 2017.
Mr Albert Zeufack, World Bank Chief Economist for Africa, launching the October 2018 issue of Africa’s Pulse said Africa was estimated to grow at an average rate of 3.1 per cent in 2019 and 3.6 per cent in 2020.
He said African governments needed to sustain reforms to ensure that they continued to grow the economy as projected. The Africa’s Pulse is a bi-annual analysis of the near-term macroeconomic outlook for the Africa Region.
Mr Zeufack said governments could not be complacent with the level of growth, because the road to the recovery would not be easy. He urged policy makers to focus on leveraging on innovation and technology to grow their economies.
Mr Zeufack said the “region’s economic recovery is in progress but at a slower pace than expected.” He said 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.
He said policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt. “Slow growth is partially a reflection of a less favourable external environment for the region,” he added.
He said the Global trade and industrial activity lost momentum, as metals and agricultural prices fell due to concerns about trade tariffs and weakening demand prospects. Mr Zeufack said while oil prices were likely to be on an upward trend into 2019, metals prices may remain subdued amid muted demand, particularly in China.
He said the financial market pressures intensified in some emerging markets and concern about their dollar-denominated debt has risen amid a stronger US dollar. He said the slower pace of the recovery in Sub-Saharan Africa (0.4 percentage points lower than the April forecast) was explained by the sluggish expansion in the region’s three largest economies, Nigeria, Angola, and South Africa.
The Chief Economist said 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 is steady; several oil exporters in Central Africa were helped by higher oil prices and an increase in oil production,” he added.
He said 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.
On public debt, Mr Cesar Calderon, Lead Economist and Lead author of the report said debt remained high and continued to rise in some countries. He said 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.
He said other domestic risks included fiscal slippage, conflicts, and weather shocks, consequently, policies and reforms were needed that could strengthen resilience to risks and raise medium-term potential growth.
He said Africa’s Pulse highlighted sub-Saharan Africa’s lower labour productivity and potentials for improvement “Reforms should include policies, which encourage investments in non-resource sectors, generate jobs and improve the efficiency of firms and workers.”
