Slower growth in key economies

Most economies in Sub-Saharan Africa (SSA) are struggling under the weight of low commodityprices, weakening currencies, and slowing growth in China. In 2015 regional growth will slow to itsweakest rate since 1999. In Nigeria, South Africa, and Angola – the region’s three largest economies– growth is faltering, and this will dominate the regional picture. The slowdown in Nigeria andAngola is being driven by low oil prices and faltering exports, while South Africa’s drawn-outeconomic troubles are due to labour market problems, rising inflation, and a protracted power crisis.Without a sustained turnaround in these three economies, regional growth will remain sluggishcompared with recent years. Most SSA currencies have already weakened substantially in recentmonths, and we expect that current account deficits and rapid inflation will cause them to depreciatefurther over the coming quarters. Even so, we doubt that the inevitable rise of US interest rates willcause a substantial reversal of capital flows or lead to balance of payments crises. There may besome volatility, however, if rates rise faster than the market expects.