Tepid recovery as “Big Three” continue to struggle

We expect that economic growth in Africa will pick up a bit in 2017 after a disastrous result in 2016. But the region’s recovery will be very weak, largely because of the poor performance of Nigeria, South Africa, and Angola (which collectively make up 70% Africa’s GDP). Growth in Nigeria and Angola will be limited by policymakers’ attempts to delay the adjustment to the fall in oil prices seen in recent years while South Africa’s recovery will be held back by significant structural issues. Growth will be stronger elsewhere. We believe that the big falls in commodity prices are behind us, and that global prices will mostly edge up, providing a boost to incomes. And, with the big currency falls now probably behind us, inflation will slow in most economies. This will allow central banks to loosen policy, providing a boost to domestic demand. Even so, the very weak performance of Africa’s “big three” will limit regional growth to just 3.0% in 2017, which is significantly weaker than that recorded during the “Africa Rising” decade from 2004 to 2014. Indeed, another year of muted growth should bring most observers around to our long-held view that African economies are unlikely to bounce back to the rapid growth to which many had become accustomed.