SLIDE 1
Africa in 2018
January 2018 Roy Mutooni, CFA, MBA (Tel: + 27 (0) 11 243-4004, roy.mutooni@abam.com)
African Growth: Cyclically Synchronised, Structurally Diverse
Economic growth on the African continent slowed from 2014 to 2017 due to a combination of adverse weather patterns, depressed commodity prices, the strong dollar and unorthodox policy response in some cases. We think 2017 was a recovery year, and expect this cyclical recovery to persist and gain momentum over 2018 across the continent. Longer term, we expect Africa will grow to be a US$29tn economy by 2050, larger than the 2012 combined size of the US and
- Eurozone. This growth will however be unevenly distributed depending on each country’s approach to investment, structural reform and
productivity.
- The key drivers of the recent weakness:
- Low commodity prices in the face of the stronger dollar;
- Sluggish global macro-economy particularly China;
- Policy inconsistency, and unorthodoxy particularly around foreign exchange;
- Some countries however managed to capitalise on the circumstances:
- Non resource based economies, particularly oil importers;
- Those with coordinated policy and orthodox policy responses;
- 2016 was the bottom, 2017 and 2018 will show growth off this base, driven by:
- Rising commodity prices, underpinning growing private sector demand in resource countries;
- Further entrenchment of sound macroeconomic policies, reform and an improving business environment.
- The key risks to our views include policy error in the developed world, and excessive debt accumulation without concomitant
increase in investment, productivity levels and exports in African countries.
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