ADDIS ABABA – Sub-Saharan Africa’s economic outlook remains bleak amid an elusive growth recovery.
This is according to the latest World Bank Africa’s Pulse report, which forecasts the Economic growth in the region to decelerate to 2.5% in 2023, from 3.6% last year.
Rising instability, weak growth in SSA’s largest economies and lingering uncertainty in the global economy are dragging down growth prospects in the region.
South Africa’s GDP is expected to only grow by 0.5% in 2023 as energy and transportation bottlenecks continue to bite. Nigeria and Angola are projected to grow at 2.9% and 1.3% respectively, due to lower international prices and currency pressures affecting oil and non-oil activity.
In per capita terms, growth in Sub-Saharan Africa has not increased since 2015.
In fact, the report says the region is projected to contract at an annual average rate per capita of 0.1% over 2015-2025, thus potentially marking a lost decade of growth in the aftermath of the 2014-15 plunge in commodity prices.
“The region’s poorest and most vulnerable people continue to bear the economic brunt of this slowdown, as weak growth translates into slow poverty reduction and poor job growth,” said Andrew Dabalen, World Bank Chief Economist for Africa.
‘Pockets of resilience‘
Amid the domestic headwinds and uncertain global growth, the report says there are “pockets of resilience” in the region.
Inflation is expected to decline from 9.3% in 2022 to 7.3% in 2023 and fiscal balances are improving in African countries that are pursuing prudent and coordinated macroeconomic policies.
In 2023, the Eastern African community (EAC) is expected to grow by 4.9% while the West African Economic and Monetary Union (WAEMU) is set to grow by 5.1%.
However, debt distress remains widespread with 21 countries at high risk of external debt distress or in debt distress as of June 2023.
Overall, the report says current growth rates in the region are inadequate to create enough high-quality jobs to meet increases in the working-age population.
An estimated 12 million young Africans enter the labor market each year while the current growth patterns generate only 3 million formal jobs annually, thus leaving many underemployed and engaged in casual and unstable work.
“The urgency of the jobs challenge in Sub-Saharan Africa is underscored by the huge opportunity from demographic transitions that we have seen in other regions,” said Nicholas Woolley, Economist and contributor to the report.
“This will require an ecosystem that facilitates private-sector development and firm growth, as well as skill development that matches business demand.”