African buzz
According to the January edition of 2019 Global Economic Prospects, regional growth in Africa is expected to accelerate to 3.4% in 2019.
The January edition of the 2019 Global Economic Prospects (GEP)
was released recently. The key message for Africa is that regional
growth is expected to accelerate to 3.4% in 2019, predicated on
diminished policy uncertainty and improved investment in large
economies, together with continued robust growth in non-
resource-intensive countries. Per capita growth is forecast to remain
well below the long-term average in many countries, yielding little
progress in poverty reduction.
The recovery in sub-Saharan Africa continues, albeit at a softer pace.
Growth in the region is estimated to have increased from 2.6% in
2017 to 2.7% in 2018, slower than expected, partly due to weaknesses
in Nigeria, South Africa, and Angola. The region faced a tougher
external environment in the year just ended due to moderating global
trade, tighter financial conditions, and a stronger US dollar.
Growth in Nigeria picked up to 1.9%, but oil production fell mid-
year and non-oil activity was dampened by lacklustre consumer
demand and disputes that disrupted crop production. In Angola,
the region’s second-largest oil exporter, the economy contracted
by 1.8% as oil production shrank. South Africa’s economy grew by
0.9% in 2018 as it emerged from a technical recession in the second
half of the year, in part due to improved activity in agriculture
and manufacturing. However, growth remained subdued as
challenges in the mining sector and weak construction activity were
compounded by policy uncertainty and low business confidence.
Economies of the Central African Economic and Monetary
Community benefitted from an increase in oil production, and oil prices
that were higher in most of 2018. Economic activity in non-resource-
intensive countries was robust, supported by agricultural production
and services, household consumption, and public investment. Several
countries of the West African Economic and Monetary Union grew at
6% or more, including Benin, Burkina Faso, Côte d’Ivoire, and Senegal.
Across the region, balance of payments financing became more
difficult against the backdrop of rising external borrowing costs
and weakening capital flows. Currencies in the region depreciated
as the US dollar strengthened and as investor sentiment towards
emerging markets wavered. Regional growth is expected to accelerate
to 3.4% in 2019, predicated on diminished policy uncertainty and
improved investment in large economies, together with continued
12 AFRICAN MINING MARCH - APRIL 2019
robust growth in non-resource-intensive countries. Per capita growth
is forecast to remain well below the long-term average in many
countries, yielding little progress in poverty reduction.
Growth in Nigeria is expected to rise to 2.2% in 2019, assuming that
oil production will recover and a slow improvement in private demand
will constrain growth in the non-oil industrial sector. Angola is forecast
to grow 2.9% in 2019 as the oil sector recovers as new oil fields come
on stream and as reforms bolster the business environment. South
Africa is projected to accelerate modestly to 1.3%, amid constraints on
domestic demand and limited government spending.
Economic activity in the CEMAC countries is expected accelerate
to 3%, benefitting from higher oil production and an increase in
domestic demand as fiscal tightening eases. Growth among metals
exporters is expected to rise moderately, supported in part by stronger
mining activity. Among non-resource-intensive countries, economic
activity is expected to remain robust, boosted by public investment
and strong agricultural production. Côte d’Ivoire is forecast to
moderate to a 7.3% pace, Kenya is anticipated to pick up to a 5.8%
rate, and Tanzania is expected to accelerate to a 6.8% pace.
Risks to the regional outlook are tilted to the downside. Slower-
than-projected growth in the Euro area and China would adversely
affect the region through lower export demand and investment.
Metals producers in the region would likely be hard-hit by
escalating trade tensions between the United States and China.
Faster-than-expected normalisation of advanced-economy
monetary policy could result in sharp reductions in capital inflows,
higher financing costs, and abrupt exchange-rate depreciations.
Increased reliance on foreign currency borrowing has heightened
refinancing and interest rate risk in debtor countries.
Domestic risks, in particular, remain elevated. Political uncertainty
and a concurrent weakening of economic reforms could continue
to weigh on the economic outlook in many countries. In countries
holding elections in 2019 (for example Malawi, Mozambique, Nigeria,
South Africa), domestic political considerations could undermine the
commitments needed to rein in fiscal deficits or implement structural
reforms, especially where public debt levels are high and rising. b
Distributed by APO Group on behalf of the World Bank Group.
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Regional growth in Africa expected to accelerate