Sub-Saharan growth to accelerate despite tighter global conditions, says poll
As economic growth slows and global trade tensions continue, the region is expected to do comparatively well
Sub-Saharan economies will cope with tighter global liquidity this year and grow faster than in 2018, albeit at a lacklustre rate compared to the commodity price boom heydays of a decade ago, a Reuters poll has found.
As interest rates tighten in developed markets and trade tensions between two of the world’s largest economies simmer, the global economic wheels are expected to turn slower — but not enough to put the brakes on the region’s momentum.
The recent poll suggests that Nigeria will grow 2.5% this year and Kenya 5.7%. Nigerian growth was expected to touch 2.7% this year in the last survey carried out three months ago, while Kenya was pegged at 5.8%. Nigeria grew 1.81% in the third quarter and Kenya 6%.
The poll shows SA will eke out 1.5% growth this year, up from 1.3% in 2017 and the 0.7% estimate for 2018, but a far cry from the more than 5% it was running at more than a decade ago.
“Despite a tighter global backdrop, we expect the growth recovery in Sub-Saharan Africa to persist, led by improved prospects in Nigeria and SA, the region’s largest economies,” Razia Khan, Africa research head at Standard Chartered, wrote in a note.
Nigeria and SA make up almost 50% of Sub-Saharan GDP in dollar terms and the World Bank projects growth of 3.4% this year in the region.
All economists who answered an extra question said growth in Sub-Saharan Africa would exceed 3%. “Much of the region will continue to reap the benefits of an earlier turnaround in commodity prices, with oil economies finding some relief in higher oil prices,” Khan said.
Last quarter’s Reuters poll suggested Sub-Saharan Africa’s economic recovery will progress slowly this year as the continent’s biggest drivers struggle to move into higher gear.
Khan wrote that she does not expect many of Africa’s economies — excluding SA, though due to more liquid financial markets — to be impacted by the first-order effects of global trade tensions.
Rates are expected to be relatively stable in the continent’s major economies. Medians showed they will be left at 14% in Nigeria and 9% in Kenya through to the middle of next year at least. Ghana is expected to cut rates by 100 basis points to 16% early next year.
In contrast, the US Federal Reserve has been raising rates. However, it has signaled fewer interest-rate hikes over the next two years and expressed caution about the US economic outlook.