Preliminary data revealed that Sub-Saharan Africa’s (SSA) economic recovery continued in the final quarter of last year, as the region rebounds from the 2016 growth slump. An estimate compiled by FocusEconomics revealed that GDP increased 3.0% annually in Q4, matching Q3’s result and marking the joint-highest reading since Q4 2015. For the full year 2017, growth came in at 2.7%, up nearly a whole percentage point from 2016’s 1.8%. Higher commodity prices, a favorable global backdrop and improving non-energy sectors helped shore up growth across the region last year. However, growth remains far below the rates tallied during the commodities boom, and many structural issues linger within the individual economies.
Looking at the fourth-quarter result in detail, activity gained steam in both Nigeria and South Africa—the region’s major players. Nigeria’s economy benefited from healthy agricultural output, although falling oil production weighed on growth. GDP figures surprised on the upside for South Africa, with the economy gaining momentum thanks to a rebound in investment and an acceleration in household spending. Moreover, historical revisions to GDP data revealed that the South African economy is in better shape than previously thought, and that growth has embarked on a moderate recovery path.
Figures for 2017 showed that Angola’s economy rebounded last year, spurred by expansions in both the oil and non-oil sectors. Activity, however, remained moderate overall, as the economy remained mired by low confidence, high inflation and exchange rate misalignments. Meanwhile, growth picked up in DR Congo, while activity was largely unchanged from 2016 in Mozambique. Data for the remaining economies is still outstanding.
Available data for this year suggests that the region’s improved economic momentum likely carried over into 2018. Renewed optimism in South Africa after Cyril Ramaphosa took the reins has spurred higher confidence, and in February the government unveiled a budget for this year that could stave off a credit ratings downgrade by Moody’s. In Nigeria, higher oil prices and easing inflation should buttress economic activity in Q1, while a calmer political scene should help get Kenya’s economy back on track. Focus Economics analysts expect regional GDP to rise 3.3% in Q1.