The ICAEW Economic Insight: Africa, is a quarterly economic forecast for the region prepared directly for the finance profession.
Africa’s performance over the year 2017: Q4 summary
- The aftershock of the oil price slump continues to plague un-diversified economies
- Overall growth is braked by the problems of the big economies (Nigeria, South Africa, Angola)
- Diversified and services-led economies had the best year
- East Africa is forecast to show very strong real GDP growth of 5.9% over the full year 2017. The biggest contributor to this expansion was Ethiopia (accounting for a full 2% of regional GDP growth), with its stellar performance of 7.1%. Another 1.7% of the increase in regional output will result from Kenya’s strong performance: 4.6% growth.
Both regional powerhouses had some political problems in the year, without which their economic performances would have been better still. In Kenya, opposition candidate Raila Odinga challenged his loss in the August presidential election in court and the Supreme Court ordered that the election be run again. It was in October, but Mr Odinga boycotted the event. Uncertainty lingers, which has delayed some investment decisions, while protest activity has hampered business. In Ethiopia, overall economic dynamism resulting from large-scale investment and modernisation continues apace, but severe forex liquidity constraints will weigh on economic activity going forward.
- In Rwanda, President Paul Kagame was re-elected in early August – with 98.7% of votes cast – and can be expected to continue implementing business friendly policies to boost entrepreneurship. Ethiopia has lifted a state of emergency that was in place for 10 months, and there is a risk that social unrest may keep disrupting the state led development that has produced the country’s economic boom. Still, real GDP growth is forecast to come in at the very impressive rate of 7.1% in 2017.