Alarm bells sound in key economies

Worries about slowing growth in China and tightening monetary policy in America have dented some of the optimism surrounding African economies. But the consensus is still far too bullish about the continent’s prospects over the short term. We see growth slowing in most key African economies this year, and expect tepid growth of just 3.8% in the region as a whole next year. Falling commodity prices and bearish market sentiment towards emerging markets are exacerbating deep-rooted domestic problems in key economies. South Africa, for instance, shows little sign of escaping the morass of high unemployment, rising inflation, and weak investment that has held back growth in recent years. In Nigeria, the situation may be even worse. Policy-makers in Abuja are engineering a slow-motion economic crisis by stalling on vital reforms and squeezing liquidity out of the economy. There are some bright spots elsewhere – in Kenya, for example – but serious problems in the continent’s largest economies will significantly slow Africa’s much-touted “rise” in 2015 and 2016.