The International Monetary Fund (IMF) on Tuesday forecast a 2.6 percent economic growth in sub-Saharan Africa this year.
The projected growth is mainly aided by the continent’s largest economies – South Africa, Nigeria and Angola – who have all made a modest recovery after a number of factors affected the economy.
“Growth is projected to rise to 2.6 percent in 2017 and 3.5 percent in 2018, largely driven by specific factors in the largest economies, which faced challenging macroeconomic conditions in 2016,” the IMF said in the latest edition of its World Economic Outlook report.
A slump in commodity prices last year and a devastating drought depressed growth in several countries in the region, resulting in a 1.4 percent growth in gross domestic product (GDP).
Nigeria, the continent’s most populous nation and a leading oil producer, was expected to make a full recovery and return to growth this year after a 2016 typified by recession, a dip in oil prices and energy shortages.
“Output in Nigeria is projected to grow by 0.8 percent in 2017 as a result of a recovery in oil production,” said the report, also citing sustained growth in the agricultural sector.
South Africa, which was hit by slow growth in 2016 was expected to register a slight improvement of 0.8 percent, up from 0.3 percent in 2016, as the impact of devastating drought was beginning to recede and electricity capacity improved.
It is unclear how the recent degradation of South Africa’s economy to a “junk” status by two credit ratings agencies will affect growth.
Angola experienced zero growth in 2016, but is now expected to show modest improvement this year – mainly thanks to the effects of economic diversification.
Although there were signs of recovery in the region, the international lender warned that the outlook remained subdued, reported the The Daily Mail UK.
“Many of the largest non-resource intensive countries will find it increasingly hard to sustain growth through higher public capital spending, as they have done in the past, in the face of rising public debt and a slowing credit cycle.”
The report also stated that output growth was expected “only moderately” to exceed population growth over the forecast horizon.
Double digit inflation was forecast in several countries, including Nigeria, Angola and Ghana, following a sharp depreciation of their respective currencies in recent months.
Tanzania, Kenya, Ivory Coast and Senegal are forecast to lift their GDP by between 5-7 percent in 2017. Ethiopia is expected to grow by 7.5 percent.