Blog posts tagged by tag: Sub-Saharan Africa
Only by freeing Nigeria from its dependence on oil can Buhari truly take Africa’s giant to the next level
In his election campaign, Muhammadu Buhari, the incumbent president and head of the All Progressives Congress (APC), ran on a platform promising to “take Nigeria to the next level”. More specifically, he pinpointed “next level agriculture”, “next level power”, “next level industrialization”, “next level tech & creative” and “next level school feeding” as the means to do so—vowing to his fellow Nigerians that “we are all going higher” as a result. After comfortably securing his second term—winning 55.6% of the votes in an election marred by characteristic delays, violence, voter apathy and condemnation by the opposition—Buhari must learn from the mistakes of his first term and immediately turn his attention to the significant challenges facing Nigeria. Particularly, the last five years have been yet another harsh reminder that Africa’s largest economy and most populous country remains fatally overdependent on its oil-related revenues, which still account for around two-thirds of government revenues and nearly 90% of export earnings. If he wishes to follow through on his campaign pledges, the former military general must therefore strive to free Nigeria from its reliance on its oil revenues, while cracking down on corruption and ensuring Nigeria’s institutions are left in better shape than he inherited them.
Few countries in modern memory have suffered as much economic destruction and human misery as Ethiopia and Rwanda. In the mid-1990s, both ranked among the poorest nations in the world, with GDP per capita of less than USD 150 dollars. At that time, both had recently emerged from bloody civil wars which left millions dead, ravaged infrastructure, and—in the case of Ethiopia—unleashed devastating famine. The economic outlook made grim reading. Yet fast forward just 25 years and, against all the odds, they are arguably the two most economically dynamic countries in the whole of Africa. Growth rates are the envy of the rest of the continent (around 10% and 7% year-on-year in Ethiopia and Rwanda respectively over the last decade), poverty has plummeted, and Ethiopian famine has been well and truly consigned to the past.
Angola’s government recently reached out to the IMF for talks on a loan deal in exchange for more structural reforms. Angola is Africa’s third-largest economy and the continent’s second largest oil-exporter. The economy was badly hit by the plunge in oil prices after 2014.
The Nigerian economy contracted in 2016 for the first time in over 20 years, and, prior to 2015, the country had recorded a decade of growth of 6% or more. The contraction in 2016 was largely due to attacks by militants on oil production, which weighed heavily on an economy that was already suffering the impact of low oil prices.
Nigeria is expected to return growth in 2017, albeit at a meagre 0.9% increase, as higher oil output and positive dynamics in the agricultural sector are helping the economy exit recession, and analysts project that growth will increase further next year. Nevertheless, Nigeria experts don’t see growth even coming close to the hay days (such as in 2014 when GDP was 6.2%), at least not before 2022.
South Africa's economy exited technical recession in Q2 and recent data provides reason for cautious optimism. The recent recovery in agricultural output carried into in Q3, and consumer confidence is increasing on the back of moderating inflation and higher real wage growth. Adding to the good news, manufacturing output expanded in August for the first time this year. That said, this positive data, should be taken with caution. Endless political bickering constitutes is a real issue. It is the biggest stumbling block to faster GDP growth, and it continues to weigh on business confidence and stave off future investment. In September, the manufacturing PMI dipped further into contractionary territory, and business sentiment remained abysmally low despite improving from the over 30-year low recorded in August. Furthermore, political noise is set to remain elevated in the foreseeable future as the country gears up for the ANC Conference in December, when a new presidential candidate for next year’s election will be chosen.
Emerging markets started 2016 on a weak note, with concerns over falling commodity prices and China’s slowing economy weighing on economic outlook. However, as the year progressed, various factors have led to emerging-market strength and economic performance was better than initially expected.
After expanding 4.0% in 2015, emerging economies grew by an estimated 3.9% last year, according to FocusEconomics’ Consensus Forecast. Economic growth was supported in 2016 by improving commodity prices and a broadly stable U.S. dollar. China’s economy proved more robust than initially feared and the recovery now looks to be back on track in Brazil and Russia.
But what’s in store for emerging markets this year? Will growth pick up in 2017?
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After a difficult 2015, the emerging markets have fortunately not decelerated as initially feared this year. Economic growth has been supported in 2016 by improving commodity prices and a broadly stable U.S. dollar. China’s economy has proved more robust than initially feared and the recovery now looks to be back on track in Brazil and Russia.
FocusEconomics’ Consensus Forecast sees emerging economies as a whole growing 3.9% this year, after expanding 4.0% in 2015. But what is in store for emerging markets in 2017?
Have a look at our latest Consensus Forecasts and find out what our panel of analysts says about the outlook for the key emerging markets next year.
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President Muhammadu Buhari beat Goodluck Jonathan in the March election, which was Nigeria’s first-ever peaceful political transition. That said, far from reaping the benefits of the “dividends of democracy”, the long delay in appointing the new cabinet led the country to a political stalemate and, consequently, to much-needed economic reforms being postponed.
In the last two years, we have seen large amounts of sovereign Eurobond issuances in the Sub-Saharan African region, reaching a record of more than USD 8 billion in 2015. However, this situation changed dramatically in the first half of this year.
[INFOGRAPHIC] Is Sub-Saharan Africa headed for the worst economic performance since the 2009 financial crisis?
Our panel of economic analysts cut their projections for the Sub-Saharan Africa region for the 6th consecutive month as external headwinds weigh on growth. Meanwhile, inflation reached an 8-month high and our panel projects that it will average 7.5% in 2015.
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