The International Monetary Fund (IMF) has slashed the economic growth prospects of Sub-Saharan Africa in its latest World Economic Outlook report.
The Fund noted that growth will slow for the second year in a row in 2023 before bouncing back in 2024.
According to the IMF’s World Economic Outlook report, the region’s growth is anticipated to drop to 3.3% this year from the 4% seen last year, followed by a rebound to 4% in 2024.
This projection is slightly lower than what the IMF had forecasted in July when it predicted that Sub-Saharan Africa would experience growth of 3.5% in 2023 and 4.1% in the following year.
Reasons for the downgrade
The surge in food, fuel, and fertilizer prices in Africa last year can be attributed to Russia’s invasion of Ukraine, which came on the heels of the economic impact of COVID-19.
This, in turn, led to weaker currencies, higher debt servicing costs, and limited access to capital markets, intensifying debt-related challenges in the region.
Major economies in SSA and the economic growth forecast
The IMF has significantly revised its growth forecasts for 2023, with oil-producing Angola now expected to grow by 1.3%, a sharp drop from the 3.5% projected in April.
Similarly, Nigeria’s growth forecast has been trimmed from 3.2% to 2.9%. South Africa, grappling with severe power shortages, is projected to grow at a mere 0.9% this year.
On a more positive note, Kenya is expected to see its growth accelerate to 5% this year, up from 4.8% in 2022, despite the government’s budget cuts in response to soaring debt costs.
Tanzania and Senegal are also poised for higher growth in the current year.
The region is grappling with rising living costs, leading to protests in countries like Ghana and Kenya.
Annual inflation is expected to reach 16.2% by the end of this year, which is consistent with the previous year’s rate, before gradually declining to 10.5% by the end of the following year, as per the IMF’s forecasts.