Africa's GDP growth sliding 17-year low

Economic growth in sub-Saharan Africa could lag behind that of the world as a whole this year for the first time since the millennium, exacerbating poverty in the world’s poorest continent.

Capital Economics, a consultancy, forecasts that growth in sub-Saharan Africa will slide to just 2.9 per cent this year, down from 3.5 per cent last year according to estimates by the International Monetary Fund, which would be the weakest rate of growth since 1999.

The macroeconomic research house forecasts that global growth will come in at 2.8 per cent (using its own estimates of Chinese growth) or 3 per cent (based on official Chinese growth data), raising the prospect of sub-Saharan Africa falling behind the rest of the world for the first time since 2000.

Moreover, this underplays the true impact. Sub-Saharan Africa’s meagre top-line growth is likely to be almost wiped out by population growth of 2.5 per cent this year, according to IMF forecasts, leaving per capita growth virtually flat. In contrast the planet as a whole should still see a meaningful rise in per capita gross domestic product, given population growth of 1.2 per cent.

Sub-Saharan Africa’s two largest economies, Nigeria and South Africa, which between them account for more than half of the region’s GDP, are in danger of seeing declines in per capita GDP this year.

Capital Economics is pencilling in top-line growth of 2 per cent in Nigeria, less than the 2.8 per cent population growth estimated by the IMF, although a consensus forecast collated by Bloomberg does point to GDP growth of 3.7 per cent.

The consultancy envisages growth of 0.5 per cent in South Africa, where even the consensus forecast of 0.9 per cent is below mooted population growth of 1.6 per cent.

Capital Economics expects growth to slow this year in six of sub-Saharan Africa’s 10 largest economies, headed by a sharp slowdown in Angola, which this week became the third African country to request a bailout from the IMF, following in the footsteps of Ghana and Mozambique. 

Source: Financial Times