World Bank slashes Sub-Saharan Africa’s growth forecast as global economy uncertainties escalate

AFRICA – The World Bank in October this year cut its economic growth forecast for sub-Saharan Africa for 2019 to 2021 by 0.2 percentage points from its earlier projection.

The multilateral financial institution cited a slowdown in fixed investment and policy uncertainty in the global economy as reasons for the downward review of the growth forecast.

The bank said the region’s economy was expected to grow by 2.6 per cent this year, from a 2.8 per cent projection in April.

It further said that growth would rise to 3.1 per cent in 2020 and 3.2 per cent in 2021.

“Despite some improvements, the external environment is expected to remain difficult and uncertain for the region,” the bank said in its October Africa’s Pulse report.

China and the United States, the world’s leading economies, this year imposed new tariffs on each other’s goods as part of a long-running dispute over Beijing’s trading practices, which Washington says are unfair.

Those tensions, plus softening global growth and falling commodity prices, compounded by the slow pace of reforms in African countries, “are weighing on activity across the region”, the bank said.

On the continent the bank said that, drought, security threats, increases in the cost of public borrowing and private investment were also slowing growth.

Nigeria, South Africa and Angola, which make up about 60 per cent of sub-Saharan Africa’s annual economic output, are all facing various impediments, the bank said.

Nigeria, according to the bank would experience slowed growth due to a weak macroeconomic policy environment and slow policy implementation.

South Africa economic revision was due to the sharp slowdown in GDP growth in the first quarter of this year, low investor sentiment, and persistent policy uncertainty.

Angola’s economy is projected to grow by 0.7 per cent this year, from a World Bank projection of 1.0 per cent in April.

The rest of Sub-Saharan Africa excluding Nigeria, South Africa and Angola is expected to grow 4.0 per cent this year from the World Bank’s 4.4 per cent projection in April, and 4.7 per cent next year and 4.8% in 2021 in line with its April forecasts.

The bank said the proportion of African countries determined to be in debt distress or in high risk of external debt distress had doubled, but the pace of deterioration had reduced.