Since 2017, sub-Saharan Africa has been recovering synchronously with the global economic tide, but this year's recovery in the region has encountered multiple obstacles, and the growth performance and development prospects of various economies have also become polarized.
International agencies lower growth forecast for this year
The International Monetary Fund (IMF) recently released the latest issue of "Economic Outlook for Sub-Saharan Africa" report, which reduced the economic growth forecast for this region to 3.2% in 2019, which is the same as the growth rate in 2018, which is higher than the IMF's April this year. The forecast is 0.3 percentage points lower.
The IMF said that lowering expectations mainly reflects uncertainties in global growth, continued declines in crude oil exporting countries such as Nigeria and Angola, and weaker-than-expected growth in South Africa.
The report shows that the two major economies in the region, Nigeria and South Africa, have insufficient economic growth momentum. The region ’s resource-intensive countries ’average economic growth rate this year is only 2.5%, while the non-resource-intensive countries’ average growth rate is as high as 6%.
In addition, according to a report released by the World Bank in early October, economic growth in sub-Saharan Africa is expected to be 2.6% this year, 0.2 percentage point lower than the April forecast. The World Bank said that due to increased policy uncertainty and inadequate power supply, the growth rate of fixed investment in sub-Saharan Africa has slowed down this year, and the expansion of the manufacturing and mining industries has slowed.
Two "locomotive" underpowered
Nigeria and South Africa are the two largest economies in sub-Saharan Africa and the two "locomotive" for economic development in the region. However, subject to the structural problems of their own economies, the economic growth of Nigeria and South Africa is weak, and the outlook is uncertain.
The IMF believes that Nigeria's economy is subject to slower development due to its fiscal situation, tax system and economic structural problems. South Africa is affected by strikes and large-scale power cuts by the national power company. Economic growth is expected to slow further.
The IMF predicts that the economic growth of Nigeria and South Africa will be 2.3% and 0.7% this year, and will rise slightly to 2.5% and 1.1% in 2020. According to the World Bank's forecast, the economic growth rate of Nigeria and South Africa will be 2.0% and 0.8% this year, and 2.1% and 1.0% in 2020.
According to the South African Statistics Bureau, South Africa ’s economy contracted by more than 3% year-on-year in the first quarter of this year, and rebounded to 3.1% in the second quarter thanks to mining growth. However, David Owen, an economist at the international consultancy IHS Markett, said South Africa ’s private sector performance has deteriorated further due to recent violent xenophobia, and South Africa ’s economic performance in the third quarter is not optimistic.
Multiple risks to recovery momentum
Both the IMF and the World Bank believe that although economic growth in sub-Saharan Africa is expected to rebound slightly next year, sub-Saharan Africa is due to factors such as the deterioration of the external trade environment, tightening global financial conditions, and the return of international capital to developed economies. The economic recovery momentum faces many risks.
At the same time, the region faces risks such as climate change and the spread of the Ebola epidemic. For example, the Zimbabwe Ministry of Finance previously stated that due to the extreme dry weather and strong tropical cyclone "Idai" this year, the country's agricultural activities and power production have been severely damaged, leading to a recession.
In addition, the World Bank believes that insufficient structural reforms will also lead to weaker trade growth in sub-Saharan Africa, slower economic diversification, and impeded improvement in the business environment.
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