In a statement released by the World Bank from a new research by the world financial body, economic growth in sub-Saharan Africa is forecast to decelerate this year due to declines in major economies such as South Africa, Nigeria, Ghana and Angola.
According to the research published by the bank, growth in the region is expected to decelerate to 2.5% in 2023 from 3.6% in the previous year before picking back up to a predicted 3.7% in the following year and 4.1% in 2025.
Since 2015, the area has not seen positive development in terms of GDP per capita since the economic activity of African nations has been unable to keep pace with the enormous rise in population throughout the continent. According to the World Bank’s “Africa’s Pulse” study, published twice yearly, around 12 million new workers are entering the African labor market each year. However, the patterns of growth that are now in place only provide 3 million employments in the formal sector.
Andrew Dabalen, the bank’s Head Economist for Africa, reacting to the report, noted that “the region’s poorest and most vulnerable people continue to bear the economic brunt of this slowdown,” as weak growth translates into delayed poverty reduction and poor job growth. “The region’s poorest and most vulnerable people continue to bear the economic brunt of this slowdown,” he stated.
Growth Projections Revised Down
Compared to the estimates provided by the World Bank in April, the growth projections for more than half of the region’s countries, or 28 out of 48, have been revised downward. It is anticipated that the most developed economy on the African continent, South Africa, which is currently experiencing its greatest energy crisis on record, would only grow by 0.5% this year.
Economic growth in two of the world’s leading oil producers, Nigeria and Angola, is anticipated to decelerate to 2.9% and 1.3%, respectively.
According to the World Bank, the Sudanese economy, which is now experiencing a severe internal armed war that has resulted in the destruction of infrastructure and has resulted in the economy coming to a complete stop, is likely to suffer a contraction of 12%. Meanwhile, if Sudan is to be removed from the equation, regional growth would come in at 3.1%.
According to the paper’s findings, “The region is projected to contract at an annual average rate per capita of 0.1% over 2015-2025, thus marking a lost decade of growth in the aftermath of the 2014-15 plunge in commodity prices.” Even while it is anticipated that inflation in sub-Saharan Africa will decrease to 7.3% this year from 9.3% in 2022, it will still be beyond the levels set by central banks in most countries.
In the meanwhile, recent military takeovers in Niger and Gabon, following in the footsteps of army takeovers in Guinea, Mali, and Burkina Faso, as well as armed conflicts in the Democratic Republic of the Congo, Ethiopia, Somalia, and Sudan, have generated further risk throughout Africa.
In addition, growing debt strains resources; in 2022, 31% of regional earnings will go toward paying interest and principal on loans.