Sub-Saharan Economy To Grow 3.7% In 2022, A Dip From 2021

By Soko Directory Team / Published July 4, 2022 | 8:57 am




KEY POINTS

Debt sustainability in Sub-Saharan Africa continues to be a major concern and as per World Bank’s Africa’s Pulse April 2022, the region’s public debt to GDP ratio increased to 61.0 percent in 2021, from 60.0 percent in 2020.


Africa

KEY TAKEAWAYS


The global economy is projected to grow at a slower rate of 2.9 percent in 2022, 1.2 percentage points lower than its initial growth outlook of 4.1 percent, largely driven by a projected 3.4 percent slow growth in emerging markets and developing economies, coupled with a 2.6 percent deceleration in advanced economies


According to the World Bank, the Sub-Saharan economy is projected to grow at 3.7 percent in 2022, which is significantly lower than the 4.2 percent growth estimates recorded in 2021.

The expected slowdown in the region’s growth will be driven by continued supply constraints, an outbreak of new COVID-19 variants, and increased inflationary pressures.

Concerns also remain high on the inflated import bill and widening trade deficit as oil prices continue to rise due to supply bottlenecks worsened by the geopolitical tensions arising from the Russia-Ukraine invasion given that most countries in Sub-Saharan Africa are net importers.

Debt sustainability in Sub-Saharan Africa continues to be a major concern and as per World Bank’s Africa’s Pulse April 2022, the region’s public debt to GDP ratio increased to 61.0 percent in 2021, from 60.0 percent in 2020.

The public debt is expected to remain elevated following tightened global financial conditions due to policy rates increase in the developed economies.

Additionally, many countries are providing subsidies in order to mitigate inflationary pressures which could worsen public finance, increase the public debt and weigh down on debt sustainability.

Related Content: Why It is Hard to Be a Farmer in Sub-Saharan Africa

At the same time, the global economy is projected to grow at a slower rate of 2.9 percent in 2022, 1.2 percentage points lower than its initial growth outlook of 4.1 percent, largely driven by a projected 3.4 percent slow growth in emerging markets and developing economies, coupled with a 2.6 percent deceleration in advanced economies.

The slow growth has been driven by rising energy prices, less favorable financial conditions, and supply chain disruptions, all of which have been exacerbated by the war in Ukraine.

In emerging markets and developing economies, the economy is expected to grow at a slower rate of 3.4 percent. The slow growth is attributable to spillovers from the war in Ukraine causing commodity price volatility, higher input costs, trade disruptions, and weaker confidence.

Going forward, there is no projected rebound next year with the global growth forecasted to slightly increase by 3.0 percent in 2023. The key challenges going forward are high commodity prices and continued monetary tightening.

Related Content: Sub-Saharan Africa To Reach 70 Million 5G Subscriptions By 2026




About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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