In its World Economic Outlook (WEO) update released on January 20, the International Monetary Fund (IMF) lowered its growth expectations for sub-Saharan Africa, citing lower oil and commodity prices and a more subdued outlook for the region’s two biggest economies, Nigeria and South Africa.
The fund now expects economic growth in the region to reach 4.9% this year and 5.2% next year, down from 5.8% and 6.0%, respectively, projected in the October 2014 WEO. The growth outlook for Africa’s best-developed economy, South Africa, has been revised down to 2.1% from 2.3% for 2015, and to 2.5% from 2.8% for 2016. Projections for Nigeria, Africa’s biggest oil exporter, have been slashed to 4.8% from 7.3% for 2015, and to 5.2% from 7.2% for 2016.
The IMF explained that its weaker projections for most commodity exporters reflects the negative impact of lower oil and other commodity prices on the terms of trade and real incomes. At the same time, for many emerging and developing economies that are oil importers, the boost from lower oil prices is less than in advanced economies, as more of the related windfall gains accrue to governments (for example, in the form of lower energy subsidies).
Last week, the World Bank also lowered its GDP growth outlook for sub-Saharan Africa to 4.6% for 2015 and 4.9% for 2016 from previously expected 5.1% in each of the two years, largely due to softer commodity prices. It predicted growth in South Africa at 2.2% this year and 2.5% next year, and growth in Nigeria at 5.5% and 5.8%, respectively, supported by continued expansion of non-oil sectors.
The IMF also estimated growth in sub-Saharan Africa at 4.8% in 2014, down from 5.1% projected in the October 2014 WEO. South Africa’s projection was unchanged at 1.4%, while Nigeria’s was slashed to 6.1% from 7% in view of the oil price slump and the weakening of the local naira currency. The World Bank anticipates growth in the region to have reached 4.5% last year.
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