African Growth in 2018

It is not the first time that I talk about the growth in Africa and specially some countries growing nearly two digits.

For this year recently started the expectations are not lower and independently which sources we are consulting, some fantastic African countries are growing again rapidly.

In Sub-Saharan Africa, the picture is one of increased optimism, with annual average real GDP growth increasing from 5.0% in 2013 to 6,1% forecasted for 2018(1). The robust and solid growth in Africa has been delivered by the domestic demand due to a population that day by day is healthier and governments are developing infrastructures across the region and slowing inflation.

However although the growth is solid varies from country to country and source to source, and the growth is modest taking the average of 3,2% real GDP(2). SSA is growing modestly and recovering the path with an improvement in commodity prices but still weakly. The largest economies in the region as South Africa, Nigeria and Angola are the ones with lower growth which is affecting the average of the region very much.

Mining in the region experienced a moderate rebound but always with the risks to be targeted by militias.

Oil producers affiliated in the Central African Economic and Monetary Community (CEMAC) have a weak activity that won’t contribute strongly to a significant development of the region. They are affected by the effects of the earlier oil collapse, so the economy will have to wait for a while to be positively impacted by the oil production.

But let’s talk about the winners and big influencers in growth for this year 2018(3).

Ethiopia is the second-most populous Sub-Saharan African country and growth is projected at 8,2%. Ethiopia is an ancient civilization and has been immersed in poverty and a very low development. The robust growth along last years supported the country to improve the position in GNI per capita moving up from the worst positions as poor country. In that sense they have ambitious targets in the long term.

Along the last 15 years Ghana has made great achievements as a democracy. It is really a very stable nation in the region. They have low corruption index and an economy very stable.

Ghana also had a significant increase in fiscal deficit that made necessary to adopt a monetary policy that led them to an elevated level of debt, rising inflation and a currency depreciation.

Ghana has great quantities of natural resources such as cocoa, gold and oil and together with all the government support, stability and business power, new oil and mining explorations will bring the country to an expected annual growth rate for 2018 at 8,3%.

Cote d’Ivoire has been promoting major changes in infrastructures and developed the private sector strongly. Average growth of the last three years was 8,3% and the expectation for this year is still strong at 7,2%.

Some countries in Africa are included in the fastest growing economies in the world in a region full of opportunities.

(1)    D&B’s Global Economic Outlook to 2018

(2)    Global Economic Prospects – World Bank

(3)    Nasdaq