Sub-Saharan Africa’s 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 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 poll, taken in the past week, suggested Nigeria will grow 2.5 per cent this year and Kenya 5.7 per cent.
Nigerian growth was expected to touch 2.7 per cent this year in the last survey carried out three months ago while Kenya was pegged at 5.8 per cent.
The West African nation grew 1.81 per cent in the third quarter and the latter 6 per cent.
A poll just a week ago showed South Africa would eke out 1.5 per cent growth this year, up from 1.3 per cent in 2017 and the 0.7 per cent estimate for 2018, but a far cry from the over 5 per cent it was running at more than a decade ago.
“Despite a tighter global backdrop, we expect the growth recovery in Sub-Saharan Africa (SSA) to persist, led by improved prospects in Nigeria and South Africa, the region’s largest economies,’’ Razia Khan, Africa research head at Standard Chartered, wrote in a note.
Nigeria and South Africa make up almost 50 per cent of Sub-Saharan gross domestic product (GDP) in dollar terms and the World Bank projects growth of 3.4 per cent this year in the region.
All economists, who answered an extra question, said growth in Sub-Saharan Africa would exceed 3 per cent.
“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 South Africa 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 per cent in Nigeria and nine per cent in Kenya through to the middle of next year at least.
Ghana is expected to cut by 100 basis points to 16 per cent early next year.
In contrast, the U.S. Federal Reserve has been raising rates.
However, it has signalled fewer interest rate hikes over the next two years and expressed caution about the U.S. economic outlook.
Last week’s poll showed South Africa’s Reserve Bank will leave interest rates at 6.75 per cent on Thursday.