Sub Saharan Africa is lagging behind the rest of the world in growth
A modest recovery is underway in Sub-Saharan Africa, supported by an improvement in commodity prices. Although growth rebounded in Angola, Nigeria, and South Africa—the region’s largest economies—it remained low.
Metals exporters in the region experienced a moderate rebound, partly reflecting an uptick in mining output amid rising metals prices. Growth was stable in non-resource-intensive countries, supported by infrastructure investment. The region is projected to see a pickup in activity over the forecast horizon, on the back of firming commodity prices and gradually strengthening domestic demand.
However, given demographic and investment trends, structural reforms would be needed to boost potential growth over the next decade. Downside risks continue to predominate, including the possibilities that commodity prices will remain weak, global financing conditions will tighten disorderly, and regional political uncertainty and security tensions will intensify.
On the upside, a stronger-than-expected pickup in global activity could further boost exports, investment, and growth in the region.
Growth in Sub-Saharan Africa (SSA) is estimated to have rebounded to 2.4 percent in 2017, after slowing sharply to 1.3 percent in 2016, as commodity prices recovered, global financing conditions remained favorable, and slowing inflation lifted household demand.
However, the recovery was slightly weaker than forecast in June, and was marked by still-negative per capita income growth, low investment, and a decline in productivity growth. In particular, the rebound in the region’s largest economies—Angola, Nigeria, and South Africa— was modest.
A recovery in the oil sector, partly due to a decline in militants’ attacks on oil pipelines, helped bring Nigeria back to positive GDP growth. However, activity remained weak in the non-oil industrial sector, as inadequate power generation hurt the manufacturing and construction industries. Strong growth in the agricultural sector, due to improved rainfalls, helped South Africa exit recession.
However, growth in the rest of the economy was subdued amid elevated policy uncertainty, which continued to weigh on business confidence. In Angola, a challenging operational environment limited investment in the oil sector.
Prolonged low growth and high unemployment has weighed on social progress in all three countries, with per capita GDP falling and the poverty head count rising in Nigeria and South Africa.
Regional growth is projected to rise to 3.2 percent in 2018, and to an average of 3.6 percent in 2019- 20. These forecasts are broadly unchanged from June, and assume that commodity prices will firm and domestic demand will gradually strengthen, helped by slowing inflation. However, despite the pickup, growth will remain below the rates seen prior to the global financial crisis, partly reflecting the struggle faced by the region’s larger economies to boost private investment.
Moreover, while per capita growth is expected to turn positive after falling in 2016 and 2017, this would be at a rate that would remain insufficient to reduce poverty.
Growth in Nigeria is projected to pick up from 1 percent in 2017 to 2.5 percent in 2018 and 2.8 percent in 2019-20. Forecasts for 2018 and 2019 were revised up, reflecting the expectations that oil production will continue to recover and reforms in the foreign exchange market, along with improved supply of electricity, will help lift growth in the non-oil sector. In South Africa, growth in 2017 was upgraded from 0.6 percent to 0.8 percent, as activity strengthened more than expected in the second half of the year. Growth is projected to pick up to 1.1 percent in 2018 and 1.7 percent in 2019-20.
Outside the three largest economies, among oil exporters, growth is forecast to strengthen in Ghana, as increased oil and gas production lifts exports.
The article is made up of excerpts of the World Bank's global forecast for 2018 report.
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