Growth in Sub-Saharan Africa slowed markedly in 2016 to 1.5%, and is projected to recover moderately in 2017 this year to 2.6%. Growth will continue to strengthen in 2018, helped by improvements in commodity prices and domestic conditions. However, the recovery remains fragile with most of the uplift coming from Africa’s three largest economies – Angola, Nigeria and South Africa – as they rebound from a sharp slowdown in 2016.
The robust growth achieved in West African Economic and Monetary Union (WAEMU) countries is continuing, supported by infrastructure investment. In East Africa, the drought that reduced agricultural production at the end of 2016 has continued into 2017, and is affecting activity in some countries, notably Kenya. Meanwhile, a steady, but more moderate growth is continuing in other countries, supported by private consumption (Comoros), infrastructure investment (Madagascar, Mauritius), and tourism (Cabo Verde, Seychelles, Mauritius).
Investment levels will recover only gradually, reflecting tight foreign exchange liquidity conditions in major oil exporters. Fiscal consolidation will slow the pace of recovery in metal exporters. Growth is expected to remain generally solid among non-resource intensive countries, supported by domestic demand. With rising debt levels and an environment of tighter and more volatile financial conditions, many African countries face the challenge of undertaking their much-needed development spending without jeopardizing their hard-won debt sustainability.
Following a decline of 1.1% in 2016, per capita gross domestic product (GDP) will be unchanged in 2017. In Angola, Nigeria, and South Africa, the weak uptick in growth implies that their GDP in per capita terms will continue to contract over the forecast horizon. With high persistent poverty rates, the region is faced with the urgent need to regain the momentum on growth in Sub-Saharan Africa and to make this growth more inclusive. This will require deep reforms to improve institutions for private sector growth, develop local capital markets, enhance efficiency of utilities, improve the quantity and quality of public infrastructure, and strengthen domestic resource mobilization, so as to facilitate structural transformation.
Key downside risks to the outlook for the region include, externally, stronger-than expected tightening of global financing conditions and rising protectionist sentiment, and domestically; slippage on reforms, increasing security threats, and political uncertainty ahead of elections in some countries.
Last Updated: Apr 01, 2017