IMF: Growth Picks Up in Africa

Growth in Sub-Saharan Africa is on the rebound, as oil prices continue to stabilize in 2018, according to the International Monetary Fund’s World Economic Outlook released in April.

“Growth in sub-Saharan Africa is also projected to rise gradually during 2018–19 to 3.4 percent and 3.7 percent, respectively, as the challenging outlook in commodity exporters gradually improves,” the report states.

Heavy hitters on the continent like Nigeria, Angola and South Africa are especially poised for growth, with Nigeria’s economy expected to grow 2.1 percent in 2018 and 1.9 percent in 2019, compared to just 0.8 percent in 2017; Angola’s economy is expected to increase from 0.7 percent in 2017 to 2.2 percent in 2018 and 2.4 percent in 2019; and South Africa is expected to grow from 1.3 percent in 2017 to 1.5 percent in 2018 and 1.7 percent in 2019. All are benefiting from improved commodity prices.

While oil and gas prices are expected to remain stable in 2018, the IMF is cautioning oil-dependent countries of an expected decline in oil prices beginning in 2019, from an anticipated average of $62.30 per barrel in 2018 to $58.20 in 2019 and $53.60 in 2023 as supply recovers.

The IMF is also urging emerging and developing markets to diversify.

“Economic diversification away from excessive dependence on commodities, or on a few sectors such as agriculture or tourism, is an overarching imperative for commodity exporters and those countries that are particularly exposed to natural disasters,” says the report.

Globally, financial conditions are expected to improve for 2018-2019, with lending conditions easing and a gradual rise in long-term interest rates.

“Except for some vulnerable economies, most emerging markets are expected to face accommodative financial conditions under the baseline forecast, with higher policy rates but sustained risk appetite,” the report states.

Sub-Saharan Africa’s inflation is also expected to improve in 2018 and 2019, though key economies, like Nigeria and Angola, continue to suffer from currency depreciation.