The World Bank on Monday lowered its 2016 sub-Saharan African growth forecast to 3.3 per cent from a previous forecast of 4.4 per cent in October, citing plunging global commodity prices.
The bank said the commodity price rout, particularly for oil, which fell by 67 per cent from June 2014 to December 2015, as well as weak global growth were behind the region’s “lackluster” performance.
The average growth rate in the SSA region came in at three per cent last year, a severe slowdown of 1.5 percentage points from the year before, the World Bank said in the twice-yearly Africa Pulse economic update.
That is the slowest rate of economic expansion since 2009, when the sub-Saharan Africa region suffered delayed blowback form the global financial crisis.
In 2016, growth is seen accelerating a little, to 3.3 per cent points, a performance the bank calls “lackluster.”
The report blamed “low commodity prices, weak global growth, rising borrowing costs, and adverse domestic developments in many countries for the slowdown across the region, noting that worst-hit were “the region’s largest commodity exporters.”
“Overall, growth is projected to pick up in 2017-2018 to 4.5 per cent,” the World Bank said in a statement.
It said a projected uptick in economic activity next year would be driven by economic powerhouses including South Africa, Nigeria and Angola as commodity prices stabilise.
Nigeria and Angola are the continent’s top two crude oil exporters whose economies have suffered as a result of sharply lower crude prices, while South Africa was also hit by lower platinum, iron ore and coal prices.
“There were some bright spots where growth continued to be robust such as in Cote d’Ivoire, which saw a favourable policy environment and rising investment, as well as oil importers such as Kenya, Rwanda and Tanzania,” the World Bank said.
Still, the World Bank singled out some “bright spots” on the continent, naming Ivory Coast and Kenya as good performers. Ivory Coast is a major cocoa exporter and hasn’t been affected by the commodities crash, while Kenya, east Africa’s biggest economy, is a net importer of energy, meaning it is set to benefit from low oil prices.