The Southern Africa region has seen a slowdown in economic growth over the past year as its largest economy, South Africa, confronts multiple challenges.
Civil unrest, electricity crisis and natural disasters have contributed to dampening prospects for the region, which is lagging behind the rest of the region, the African Development Bank’s new economic report says.
The 2023 Southern Africa Economic Outlook states the region’s GDP growth barely reached 2.7% in 2022, a level much lower than global and African averages of 3.4% and 3.8 %.
The slowdown in South Africa has been mirrored in other countries within the region such as Zimbabwe, Zambia, Malawi, Madagascar, and São Tomé and Príncipe, which have also experienced intense adverse weather events, per the report.
Growth in the region is expected to slow down further in 2023 to 1.6%, followed by a slight improvement – 2.7% – in 2024.
Weighing down the environment further is the external debt burden which is forecast to remain high across the Southern Africa region. In 2022 it stood at 48%.
“Per capita income growth for most countries in the Southern Africa region is short of the growth rate needed to reverse the increase in poverty induced by the (Covid-19) pandemic and to put the region on track to meet the SDG1. High poverty and inequality rates remain endemic across the Southern Africa region,” the report noted.
External debt which stood at 48% in 2022, is forecast to remain high across the Southern Africa region. Overall, debt exposure is mixed within southern African countries. However, the fiscal deficit improved slightly in 2022 at 3.5% of GDP in 2022, compared to 3.7% of GDP in 2021.
The report links the slow regional performance to “lingering political and structural issues in South Africa, which drags down regional growth, and the impact of the war in Ukraine, which continues to put pressure on energy and food prices.
“The report also notes that falling per capita income growth for most countries in the Southern Africa region threatens the growth rate needed to reduce poverty, while sluggish growth is weighing on youth employment. Unemployment is described as “one of the region’s biggest challenges.”
The region includes two of Africa’s ten largest economies – South Africa and Angola.