Thursday, 27 April 2017

In search of green shoots

Caught between a more slowly growing China and the nationalist and protectionist reflexes of President Donald Trump's United States government, Africa is in pressing need of an economic boost. Last year marked a harsh coda to the commodity boom, with the continent's biggest economies treading water or in recession. Initially, the international financial institutions forecast a turnaround starting in 2017 after average growth rates of 1.3%, the lowest for two decades. Already they are qualifying their optimism.

Both the International Monetary Fund and World Bank have cut their average African growth forecasts to 2.6% this year, down from January’s 2.9%. They have also cut Africa growth forecasts by four percentage points for 2018. Four key factors inform the grimmer predictions: continuing weakness in the four biggest economies (Nigeria, South Africa, Egypt and Algeria) which make up almost two-thirds of African output; continuing low foreign and local investment; shrinking access to international finance for companies and governments; and heightened political risks, such as the lack of effective policies in South Africa or Nigeria, prospects of difficult elections and transitions in Kenya and Angola, and conflict in Congo-Kinshasa.

Again, impressive growth is forecast in the brightest economic spots, such as Ethiopia, Senegal and Tanzania, but their economies are still not big enough to power a more generalised regional recovery.

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