Sub Saharan Africa Economic Forecast

Economic Snapshot for Sub-Saharan Africa

March 25, 2020

Growth is expected to deteriorate in 2020

The region’s 2020 economic outlook deteriorated markedly this month owing to the intensifying coronavirus fallout and slump in commodity prices, particularly of oil. Major risks to the outlook include the disruption to tourism and remittances; slowdown in investment and thus job losses; fall in fiscal revenues and FX earnings; and increased strain to healthcare systems. 

Sub-Saharan Africa Monetary & Financial Sector News

Regional inflation slowed for the first time in nearly a year at the outset of 2020, coming in at 14.7% in January (December: 15.6%). Falling inflation in Ethiopia and Ghana mainly led the deceleration.  Price pressures in the region are expected to ease this year amid still-tight monetary conditions.

The central banks of Ghana, Kenya and South Africa delivered sharp cuts to their benchmark rates in March to contain the adverse economic impacts from the fast-spreading coronavirus. Monetary authorities across the region also unveiled various measures to free up liquidity in the banking system and real economy. Most of the region’s currencies weakened against the U.S. dollar over the past month.

 

Virtually all of the region’s currencies lost ground against the USD recently amid sharp emerging-market risk-off sentiment on rising fears over the coronavirus outbreak. Notably, Nigeria’s Central Bank devalued the naira after coming under pressure due to the oil price plunge. The vast majority of currencies in the region are expected to depreciate further this year compared to 2019.

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