SUB-SAHARAN Africa’s economic activity has been projected to pick up by 2.4% this year, from 1.3% last year, before accelerating to 3.4% next year.
Unfortunately South Africa, the region’s second-biggest economy, is still trapped in low growth, global lenders IMF and the World Bank said yesterday. In the second quarter of this year, Nigeria pulled out of a five-quarter recession and South Africa emerged from two consecutive quarters of retraction.
According to the World Bank report, in metal exporting countries an increase in output and investment in the mining sector amid rising metals prices has enabled a rebound in activity. In addition, the report pointed out that nations’ fiscal deficits have narrowed but continue to be high, and that government debt remains elevated.
Across the region, additional efforts are needed to address revenue shortfalls and contain spending to improve fiscal balances. “Most countries do not have significant wiggle room when it comes to having enough fiscal space to cope with economic volatility. “It is imperative that countries adopt appropriate fiscal policies and structural measures now to strengthen economic resilience, boost productivity, increase investment, and promote economic diversification,” Albert Zeufack, World Bank chief economist for Africa said.
He said looking ahead, sub-Saharan Africa is projected to see a moderate increase in economic activity, with growth rising to 3.2% in 2018 and 3.5% in 2019 as commodity prices firm and domestic demand gradually gains ground, helped by slowing inflation and monetary policy easing. “As African countries seek new drivers of sustained inclusive growth, attention to skills building is growing,” he said.
At the same time, the IMF cut South Africa’s economic growth forecast to 0.7% this year, from 1.1% in July citing rising political uncertainty and low consumer and business confidence. The South African economy has been below par and it’s likely that Finance Minister Malusi Gigaba will also revise growth downwards in his mini-budget two weeks’ time.
The last time the SA domestic economy grew above 3% was in 2011, and since then it has been struggling below 1%. “Growth is projected to remain subdued despite more favourable commodity export prices and strong agricultural production, as heightened political uncertainty including consumer and business confidence,” the IMF said.
Rebeilwe Seama, an economist and consultant specialising in sub-Saharan Africa activities, said it was sad and unfortunate that while other countries in the region were poised to recover, the South African economy was trapped in the middle of the political squabbles.