Cracks emerge in the “Africa Rising” story

The long-run growth outlook for sub-Saharan Africa (SSA) remains good, but recent developments have caused cracks to emerge in the “Africa Rising” story. Budget and current account positions have deteriorated sharply in the likes of Ghana and Zambia. Both countries have recently requested help from the IMF and, with a period of fiscal austerity now looming, growth is likely to slow in the near term. External headwinds could affect parts of the region too. A slowdown in investment-led growth in China is likely to weigh on the region’s metals producers, such as South Africa. But while there are challenges, a return to the economic disasters of the 1980s seems unlikely. As such, we expect growth in SSA to edge down, rather than collapse, over the next couple of years. We are forecasting regional growth of 5.0% in 2014 and 2015, before a pick-up to around 5.5% in 2016.