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Africa's growth to lag rest of the world
October 22, 2017, 3:19 pm
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In its latest biannual assessment of global economic health, the International Monetary Fund (IMF) notes that economic growth in sub-Saharan Africa is on average lagging behind growth in other parts of the world.

The IMF publishes its analysis and projections of economic developments on the global level through the World Economic Outlook in April and September/October of each year. The October 2017 report points out that, while global growth forecast for 2017 and 2018 is 3.6 percent and 3.7 percent respectively, in sub-Saharan Africa it is 2.6 percent in 2017 and 3.4 percent in 2018.

The report notes that though there is a global upswing in economic activity supported by “notable pickups in investments, trade and industrial production, coupled with strengthening business and consumer confidence”, the prospects for many emerging market and developing economies in sub-Saharan Africa, the Middle East, and Latin America remain "lackluster".

The IMF outlook for sub-Saharan region clarifies that there are significant differences between different nations in this region, with the bigger economies being held back by “idiosyncratic factors”, many other countries are being hobbled “by delays in implementing policy adjustments”.

The report cautioned that beyond the short term, “growth is expected to rise gradually, but barely above population growth, as large consolidation needs weigh on public spending”.

Nigeria and South Africa, the two largest economies in sub-Saharan Africa and which contribute more than half of the region’s GDP, are expected to lift regional growth next year, once their central banks cut rates to boost economies.

Nigeria’s economy, currently Africa’s biggest, will grow 2.4 percent in 2018, up from 0.8 percent this year, while South Africa, the continent’s most industrialized economy, is expected to grow 1.2 percent in 2018 compared to 0.7 percent this year.
Economists expect the two economies, which emerged from recession in the second-quarter of this year, to cut interest rates sometime in the first-quarter of next year — South Africa by 25 basis points to 6.5 percent and Nigeria by the same margin to 13.75 percent.
However, analysts warn, return of consumer confidence will be key to buoyancy in both economies. Nigeria has suffered from dollar shortages and fall in commodity prices, while South Africa has been dogged by political uncertainty.

While market recovery in the developed economies is likely to benefit growth in sub-Saharan Africa, weak investment and productivity in the region will need to be addressed through stronger foreign direct investment, higher government revenues and more inclusive growth said the IMF report.

Two bright spots in the region are Ethiopia and Ghana, where growth next year could be better than the continent’s biggest economies. Ghana is expected to grow 6.6 percent next year from the 6.3 percent in 2017, while Ethiopia, already one of the fastest growing economies in Africa, could grow by 9 percent, the IMF reported.

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