In 2022, growth in Sub-Saharan Africa (SSA) slowed to an estimated 3.4%, according to recent Global Economic Prospects report by the world bank. This was as a result of weakening external demand, high inflation, tightening global financial conditions and disruptions caused by Russia’s invasion of Ukraine.
This resulted in soaring food and energy prices, sharp cost-of-living increases across the region, and increased food insecurity and poverty. Nigeria, the region’s largest economy witnessed a slowdown as well as oil output greatly dropped by over 40% due to rising production costs and decline in investment.
Other leading countries such as South Africa, Ethiopia and Kenya also faced a number of challenges. In South Africa, the situation was similar as the country faced a decrease in trade due to falling global metal prices as well as recurring power outages. On the other hand, Kenya and Ethiopia were mostly affected by prolonged droughts, which further lowered agricultural output, which was already highly affected by high production costs.
The SSA economy is projected to grow slightly to 3.6% in 2023 and 3.9% in 2024. With the expectation of moderation in global commodity prices, cost of living pressures are expected to be tempered, while tighter policy stances are expected to elevate inflation and public debt. However, constrained access to external financing, tight fiscal space, and high borrowing costs are expected to markedly limit many governments’ ability to spur faster growth. Additionally. the negative impact of persistent poverty and food insecurity on growth, amplified by other vulnerabilities, such as unfavourable weather, high debt, policy uncertainty, and violence and conflict is anticipated to keep the pace of recoveries subdued in many countries. The continent may also be highly affected by the resurgence of COVID-19.
For instance, countries such as Nigeria and South Africa are expected to slowdown further, with growth projections of 2.9% and 1.4% respectively, due to weakening in the oil sector and trade. On the other hand, in more diversified economies, lower prices of imports are expected to have a stronger positive effect by boosting activity in services and agriculture.For the global economy, the situation is no different as global growth continues to slow sharply. In fact, there is an expectation of sliding into recession this year if there is a resurgence of COVID-19 and escalation of the ongoing Russian-Ukrainian war. If this happens, it will be the first time in more than 80 years that two global recessions have occurred within the same decade. The global economy is projected to grow by 1.7% in 2023 and 2.7% in 2024.
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