IMF: China’s slowdown will hit sub-Saharan growth

IMF: China’s slowdown will hit sub-Saharan growth
A one percentage point decline in China's growth could reduce Africa's growth by at least 0.25% or more within a year, says the IMF / bne IntelliNews
By Hany Abdel-Latif of IMF, Michele Fornino of IMF November 10, 2023

China has forged deep economic ties with countries in sub-Saharan Africa over the past 20 years, making it the region's largest single country trading partner. China buys one-fifth of the region’s exports—metals, minerals, and fuel—and provides most of the manufactured goods and machinery imported by African countries.

However, China’s recovery from the pandemic has slowed recently due to a property downturn and flagging demand for its manufactured goods as global growth has also slowed.

This matters for Africa. A one percentage point decline in China’s growth rate could reduce average growth in the region by about 0.25 percentage points within a year, according to the latest Regional Economic Outlook. For oil-exporters, such as Angola and Nigeria, the loss could be 0.5 percentage points on average.

 

1123 Africa impact of Chinese slowdown IMF

The ripple effects of China's slowing economy extend to sovereign lending to sub-Saharan Africa, which fell below $1 billion last year—the lowest level in nearly two decades. The cutback marks a shift away from big ticket infrastructure financing, as several African countries struggle with escalating public debt.

1123 Africa Chinese loans plummet IMF

Chinese loans to the region rose rapidly in the 2000s, with the country’s share of total sub-Saharan African external public debt jumping from less than 2 percent before 2005 to 17 percent by 2021.

This makes China the largest bilateral official lender to countries in the region. However, the share of debt owed to China remains relatively small, at just under 6 percent of the region’s overall public debt and is mostly owed by five countries—Angola, Cameroon, Kenya, Nigeria, and Zambia.

Adapting to change

With geoeconomic fragmentation on the rise, sub-Saharan African countries will need to adapt to China’s growth slowdown and declining economic engagements by building resilience through increased inter-African trade and by rebuilding buffers, including through tax policy reforms and improvements to revenue administration.

Efforts to diversify African economies are also vital to sustain future growth. The strong demand for minerals that support renewable energy development could provide an opportunity for countries to forge new trade relationships and develop more local processing capabilities.

Countries can improve their competitiveness by creating a favorable business environment, investing in infrastructure, and deepening domestic financial markets.

****

Hany Abdel-Latif and Michele Fornino are economists in the IMF's African Department, where Wenjie Chen is a deputy division chief and Henry Rawlings is a research assistant.

 

Read in IntelliNews Pro
Get IntelliNews Pro

Related Content

COP28 talks to save the planet could fall at first fence as oil producers and some rich countries call only for “phase down” of fossil fuels.

Russian metals major Nornickel selling stake in Nkomati JV in South Africa to African Rainbow Minerals

SDS storms fed by sand and dust equal in weight to 350 Great Pyramids of Giza, says UNCCD

Opinion

COMMENT: Is Slovakia ready to fight back against Fico´s increasingly autocratic government?

The upcoming months will show the real level of determination of Slovak society to fight for its liberal-democratic future.

ING: Romanian growth figures reinforce signs of resilience.

The release of detailed data for third-quarter GDP growth, alongside a rather hefty upward adjustment of the flash print, points to a pretty resilient growth picture in Romania. We marginally raise our full-year growth forecast from 1.5% to 1.7%, wit

KSE: Financing Democracy – why and how donors should support Ukraine

The Working Paper #1 of the Economic Policy Advisory Council proposes how to structure the “deal” between the partners and Ukraine in a way that would build trust, and that would be most effective in helping to win the war.

CENUSA: The EU must not allow mistakes over Ukraine to compromise its expansion policy

European military-financial support for Ukraine's defence efforts and its political-strategic support for ​​Ukraine's European accession are interdependent. They can have a positive influence on each other or can obstruct each other.

Experts argue EU’s New Growth Plan is too small to make a difference

Proposed plan for Western Balkans involves integration into the EU single market, with a €6bn financial package.

COMMENT: Is Slovakia ready to fight back against Fico´s increasingly autocratic government?
1 hour ago
ING: Romanian growth figures reinforce signs of resilience.
3 hours ago
KSE: Financing Democracy – why and how donors should support Ukraine
2 days ago
CENUSA: The EU must not allow mistakes over Ukraine to compromise its expansion policy
2 days ago
Experts argue EU’s New Growth Plan is too small to make a difference
3 days ago

Follow Us On

Most Read

  1. LONG READ: The boomerang effect: sanctions hurt Europe more than Russia
    6 days ago
  2. Putin's approval rating up to 85% in November, Russians happy with the country's direction
    4 days ago
  3. Oil continues to flow to Israel via Turkey despite Erdogan’s vehement speeches on plight of Gaza
    1 month ago
  4. Top Ukrainian politician David Arakhamia gives seventh confirmation of Russia-Ukraine peace deal agreed in March 2022
    11 days ago
  5. Former Kazakh leader Nazarbayev confesses to polygamy with Miss Kazakhstan 1999
    2 days ago
  1. Oil continues to flow to Israel via Turkey despite Erdogan’s vehement speeches on plight of Gaza
    1 month ago
  2. Top Ukrainian politician David Arakhamia gives seventh confirmation of Russia-Ukraine peace deal agreed in March 2022
    11 days ago
  3. Russia overtakes Germany to become fifth biggest economy in the world in GDP on a PPP basis
    4 months ago
  4. Armenia marks new era with French military purchases
    10 days ago
  5. Lavrov confirms Ukraine war peace deal reached last April, but then abandoned
    2 months ago

Reports

SELECT `n`.`nid` AS `id`, `n`.`title`, 'bne IntelliNews' AS authors, 'bne IntelliNews' AS bylines, `wc`.`field_website_callout_value` AS `summary`, `smc`.`field_social_media_callout_value` AS `social`, `pd`.`published_at` AS `date`, `p`.`field_publication__tid` AS `publication_id`, `fm`.`uri` AS `image`, `fspcaption`.`field_story_photo_caption_value` AS `image_credit`, `fspcredit`.`field_story_photo_credit_value` AS `image_author`, `ws`.`field_website_sections_tid` AS `section_id`, `fdfs`.`field_subject_tid` AS `subject_id`, `db`.`body_value` AS `body`, `fm2`.`uri` AS `pdf`, `et`.`field_enable_tracking_value` AS `tracking`, `ht`.`field_head_tags_value` AS `headTags`, `bt`.`field_body_tags_value` AS `bodyTags` FROM `node` AS `n` LEFT JOIN `field_data_field_website_callout` AS `wc` ON wc.entity_id = n.nid LEFT JOIN `field_data_field_social_media_callout` AS `smc` ON smc.entity_id = n.nid LEFT JOIN `publication_date` AS `pd` ON pd.nid = n.nid LEFT JOIN `field_data_field_publication_` AS `p` ON p.entity_id = n.nid LEFT JOIN `field_data_field_story_picture` AS `sp` ON sp.entity_id = n.nid LEFT JOIN `file_managed` AS `fm` ON fm.fid = sp.field_story_picture_fid LEFT JOIN `field_data_field_story_photo_caption` AS `fspcaption` ON fspcaption.entity_id = n.nid LEFT JOIN `field_data_field_story_photo_credit` AS `fspcredit` ON fspcredit.entity_id = n.nid LEFT JOIN `workflow_node` AS `wn` ON wn.nid = n.nid LEFT JOIN `field_data_field_website_sections` AS `ws` ON ws.entity_id = n.nid LEFT JOIN `field_data_field_subject` AS `fdfs` ON fdfs.entity_id = n.nid LEFT JOIN `field_data_body` AS `db` ON db.entity_id = n.nid LEFT JOIN `field_data_field_file` AS `ff` ON ff.entity_id = n.nid LEFT JOIN `file_managed` AS `fm2` ON fm2.fid = ff.field_file_fid LEFT JOIN `field_data_field_enable_tracking` AS `et` ON et.entity_id = n.nid LEFT JOIN `field_data_field_head_tags` AS `ht` ON ht.entity_id = n.nid LEFT JOIN `field_data_field_body_tags` AS `bt` ON bt.entity_id = n.nid WHERE (n.status = 1) AND (n.type = 'article') AND (n.nid = 300720) AND (wn.sid= 3) AND (p.field_publication__tid IN (2465,2851,3184,3159,3266,3264,3270,3265,3267,3268,3269,3171,3168,3185,3170,1346,1345,3180,3175,3254,3249,1207,1208,3181,3231,3177,3186,3178,1003,3187,2975,3204,3198,3188,3202,3196,3250,3189,3160,3161,3312,3313,3173,3314,3315,3167,3259,3257,3263,3258,3260,3261,3262,3174,3316,3165,3192,3163,3282,3190,2811,3256,3317,3162,3318,3191,3297,3182,3179,3166,3319,3376,3320,3172,3255,3169,1008,3203,3197,3321,3252,3164,1307,3322,3183,3220,3176,3201,3323,1327,1020,1006,1009,1013,1014,1018,1005,1328,1010,1011,1002,1012,1311,1330,1017,1016,1019,1004,1001,1334,1335,1336,1015,1337,1338,1339,1340,1341,2496,2501,2517,2529,2506,2505,2524,2513,2526,2537,2489,2490,2520,2536,2488,2532,2500,2515,2503,2493,2527,2523,2510,2525,2498,2499,2528,2507,2487,2511,2521,2502,2491,2519,2497,2492,2514,2495,2509,2512,1629,3358)) LIMIT 1
Dismiss