Sub Saharan Africa Expected to Grow at 3.4 Percent in 2018

The gross domestic product for the Sub Saharan region is expected to grow at the rate of 3.4 percent in 2018.

In 2017, the GDP growth for the region was projected at 2.8 percent with this year’s growth being pegged on higher commodity prices as well as improved capital market access.

During the first quarter of 2018, the International Monetary Fund (IMF) released their Regional Economic Outlook report for the Sub Saharan Region and focused mainly on domestic revenue mobilization and private investments.

The average current account deficit in Sub Saharan Africa is estimated to have narrowed to 2.6 percent of GDP in 2017 from 4.1 percent in 2016.

The improvement was due to an increase in international receipts in about half of the region’s economies.

For large oil exporters, external balances improved due to higher oil production, improvement in oil prices, and reduced imports with the current account deficit in the Central African Economic and Monetary Community (CEMAC) declining to 4.3 percent of GDP in 2017, from 13.8 percent of GDP in 2016.

In non-resource intensive countries, the current account deficits remained high in 2017, due to a combination of low exports, high capital goods imports, high food and fuel imports, and increased imports related to public infrastructure projects.

Regional annual inflation for the region fell to just over 10.0 percent in 2017, from 12.5 percent in 2016, and is expected to fall further in 2018, driven by declining food prices due to improved weather conditions.

The report points to an improved operating environment in the region with:

• A projected higher GDP growth in 2018 of 3.4 percent compared to 2.8 percent in 2017
• The average current account deficit narrowing to 2.6 percent of GDP in 2017, from 4.1 percent in 2016
• Average annual inflation declining to 10.0 percent in 2017 from 12.5 percent in 2016, expected to fall further in 2018.

The key concern, however, remains the rising debt burden, as public debt continued to rise in 2017, with about 40.0 percent of low-income developing countries in the region being in debt distress or at a high risk of debt distress, and the median level of public debt in SSA exceeding 50.0 percent of GDP.

With the rise in debt, interest payments have also been on the rise, with the median interest payments-to-revenue ratio close to 10.0 percent, up from the 5-year average of 5.0 percent.