The lower commodity prices, depreciation of local currencies as well as the weakening demand, have put Sub-Saharan Africa (SSA) economies under pressure, said BMI Research, a Britain-based economic researcher, on Wednesday.
Over the coming five years, the global economic environment will be less conductive to growth in SSA than it has been over the past five years, as lower commodity prices and weak external demand will “take their toll”, said BMI Research in a special report.
Its forecasts for real GDP growth indicate that 10 fastest-growing economies in SSA over the next five years will be: Burkina Faso, the Republic of the Congo, Cote d’Ivoire, the Democratic Republic of the Congo, Ethiopia, Kenya, Mozambique, Rwanda, Tanzania and Zambia.
According to the agency, key factors that will drive the 10 economies’ outperformance are: lower oil prices will provide a boost to several economies; the mining industry is still an important growth propellant; consumer markets are burgeoning, albeit from a low base; government policy will play a pivotal role in some economies, highlights the researcher.
By contrast, commodity exporting economies are expected to become the underperformers in SSA, as commodities prices will be “well subdued across the world”, among which oil will only undergo an “L-shaped” recovery over the same forecasting period. For instance, Nigeria will drop out of the top 10 outperformers as weaker oil prices undermine its performance; Ghana’s growth, however, will be impacted by domestic factors such as power shortage, said BMI Research.
In the projection, the average prices of Brent Crude, WTI Crude and Iron Ore this year would be 59 dollars per barrel, 52 dollars per barrel and 60 dollars per ton, compared with the averages of 99 dollars, 93 dollars and 97 dollars in 2014.
The researcher stressed that across SSA region, infrastructure growth dynamics are evolving. And in the future, the demand for infrastructure and sources of funding will depend much more heavily on strong internal demand, supportive demographics and reforms in the business environment. Enditem