Growth prospects for Sub Saharan Africa remains strong.
The recent release of the Global Economic Prospects – June 2011, observes growth in sub-Saharan Africa to have averaged 4.8% in 2010, up from 2% during the 2009 crisis year and is projected to close in on its pre-crisis average growth rate of about 5% in 2011.
Given that the underlying dynamics driving growth in SSA remains unchanged, and the pick-up in growth from some of the larger economies that have lagged behind (South Africa and Angola) we project that by 2011, growth in SSA would have returned to its pre-crisis average of about 5% and that it would strengthen further to about 5.7% in 2012 and 2013, making it one of the fastest growing developing regions.
Sources of Growth in SSA. Growth in SSA has been driven by developments on both the external and domestic front. On the external front, higher commodity prices and the recovery in the global economy has helped boost export receipts in SSA. Not only merchandise exports but also trade in services such as tourism arrivals and receipts in a number of tourism destinations in the regon. Real exports of goods and services are estimated to have risen by 8.3% in 2010.
|Risks to the Outlook Higher commodity prices in particular that of oil and food prices present a risk to the outlook. As regards oil prices it is important to make a distinction between the oil exporting countries in the region with that of the oil importing countries in the region. Obviously the downside risks are weighted against the oil importers in the region. By our own calculation, if oil prices rise above their March 2011 levels by $50, then this could shave up to one percentage points of current GDP projections. |
Poor rains forecast for parts of sub-Saharan Africa (e.g. East Africa), could lead to increased food prices and derail the growth outlook because of the importance of agriculture in several countries. Poor rains affect not only the agricultural sector but also the production of electricity in some countries. All this will increase inflationary pressures in prices. Indeed some countries (e.g. Kenya) have increased interest rates to contain inflationary pressures.
Finally political upheaval, as already observed in parts of the Middle East and North Africa could curtail growth prospects. This is all the more important in 2011, as about a third of countries in sub-Saharan Africa are carrying out national elections.