Resource-Rich Countries in Africa Face a Slump in Economic Growth

The International Monetary Fund (IMF) has released its Sub-Saharan Africa Regional Economic Outlook, which indicates the countries that rely on resources such as oil and minerals will face slow economic growth.

“Growth is projected to remain strong in non-resource-intensive countries, averaging about 6 per cent. As a result, 24 countries, home to about 500 million people, will see their per capita income rise faster than the rest of the world,” the IMF said.

It added that “In contrast, growth is expected to move in slow gear in resource-intensive countries (2½ per cent). Hence, 21 countries are projected to have per capita growth lower than the world average.”

Overall, the Growth in sub-Saharan Africa is projected to remain at 3.2 per cent in 2019 and rise marginally to 3.6 per cent in 2020, a growth that was revised downwards. However, Global growth is expected to rise from 3.0 per cent in 2019 to 3.4 per cent in 2020, putting Africa’s growth above the World average.

Its findings resonate with the World Bank’s Africa’s Pulse 2019 report, which stated that resource countries such as Angola and South Africa will slow down the rate of Sub Saharan growth.

The IMF also reflected that the downward revision reflects a more challenging external environment, continued output disruptions in oil-exporting countries, and weaker-than-anticipated growth in South Africa.

“South Africa’s growth is projected to remain subdued, increasing only mildly from 0.7 per cent in 2019 to 1.1 per cent in 2020, as private investment and export growth are expected to remain low,” the IMF reported.

The IMF expects Inflation to ease going forward. “While the average sub-Saharan African-wide debt burden is stabilizing, elevated public debt vulnerabilities and low external buffers will continue to limit policy space in several countries,” it said.

Feature Image Courtesy: Seeking Alpha