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ECONOMIC growth in Sub-Saharan Africa is recovering moderately, following a sharp slowdown over the course of the last two years.
Estimated to have strengthened from 1.3% in 2016 to 2.4% in 2017, Gross Domestic Product (GDP) growth in the region is mainly led by the continent’s largest economies: Nigeria, South Africa, and Angola. Nigeria and South Africa have exited recession; however, their pace of recovery remains sluggish.
Elsewhere, an uptick in mining output along with a recovery in the agricultural sector boosted economic activity for metal exporters. And GDP growth was stable in non-resource intensive countries, supported by domestic demand.
Improving global conditions, including high commodity prices, curtailed current account deficits. Capital inflows rose in 2017, helping to finance current account deficits and cushion foreign reserves. Sovereign bond issuance rebounded in 2017, with Nigeria, Senegal, and Cote d’Ivoire selling bonds on the international capital markets, indicating improving global sentiment towards emerging and frontier markets like them.
STILL A LOT TO DO
Headline inflation slowed across the region in 2017 amid stable exchange rates, and amid slowing food price inflation due to higher food production. Fiscal deficits slightly narrowed, but continued to be high, as fiscal adjustment measures remained partial at best.
Across the region, additional efforts are needed to address revenue shortfalls and spending.
-Looking ahead, Sub-Saharan Africa is projected to see a steady pickup in activity, with growth rising to 3.2% in 2018 and 3.5% in 2019 as commodity prices stabilise and domestic demand gradually gains ground, helped by slowing inflation and monetary policy easing.
-That said, growth prospects will remain weak in the Central African Economic and Monetary Community (CEMAC) countries – Gabon, Cameroon, the Central African Republic (CAR), Chad, the Republic of the Congo, and Equatorial Guinea – as they struggle to adjust to low oil prices amid depressed revenues and rising debt levels.
-The economic expansion in West African Economic and Monetary Union (WAEMU) countries – Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo – is expected to proceed at a strong pace on the back of robust public investment, although growth is projected to soften in Cote d’Ivoire due to low cocoa prices.
-Among the East African countries, Ethiopia is likely to remain the fastest growing economy, supported by continuing infrastructure investment. Growth is projected to recover in Kenya, as inflation eases, but to slow in Tanzania with moderation in investment growth.
The outlook for the region remains challenging, with economic growth remaining well below the pre-crisis average. The moderate pace of growth will translate into only slow gains in per capita income, which declined in 2016/17, and will be far from sufficient to promote shared prosperity or accelerate poverty reduction.