Nigeria, SA, Angola sluggish performance slowdown SSA economy

Nigeria, SA, Angola sluggish performance slowdown SSA economy

Growth momentum in Sub-Saharan Africa (SSA) eased to 2.3% ,annualized, in 2018 relative to 2.6% in 2017, GTI Research reckoned in its recent economic review.

According to the firm, the slowdown in the region’s growth was mainly driven by the sluggish performance of the region’s three biggest economies – Nigeria, South Africa, and Angola.

In Nigeria, economic activities continue to recover from the 2016/17 recession experience, albeit at a slower pace.

In the first quarter of fiscal year 2018 (Q1’18), Nigeria’s economy grew by 1.95%, driven mainly by the recovery of crude oil prices in the international market.

However, growth momentum which initially softened to 1.5% and 1.8% in the second and third quarters of 2018 respectively due to the under performance of oil and non-oil sectors rallied to 2.38% in fourth quarter in the same year  as increased political and festive demand pressure drove faster growth in agriculture and services sector.

In the recent first quarter in 2019 GDP report by the NBS, growth momentum eased slightly to 2.01%.

We believe that the trend may persist throughout the remaining quarters of 2019 owing to the volatile outlook of the crude oil market and absence of policy-based fiscal stimulus, GTI Research said.

In South Africa

In similar vein, the South Africa economy has remained in the shadow of its strength in the last five quarters.

In the first half of 2018, the economy contracted by 2.7% and 0.5% respectively in the first quarter and second quarter in 2018 following a dismal performance of the agriculture, trade and mining sectors.

The trend showed that this trajectory was then reversed in third and fourth quarter of fiscal year 2018,  owing to a slim recovery in the manufacturing, finance, real estate, transport, storage and communication industries driven by government fiscal stimulus.

However, the latest first quarter in 2019 GDP data by Statistics South Africa (SSA) revealed that GDP growth of Africa’s second-largest economy contracted by 3.2%, owing to the sharp slowdown in 8 of its 11 major sectors.

In Angola,

The review shows that Angola economy remains stocked in recession for a third successive year, despite the recovery in crude oil price in 2018.

The economy , on an annualized basis, contracted by 1.2% in 2018; higher than the 0.1% reported in 2017.

Nonetheless, the government’s recovery effort brought little respite in the fourth quarter  in 2018 as the economy expanded by 2.2% to ease the effect of contractions (-2.5%) in the first  quarter, (-5.1%) in the second quarter and (-1.6%) in the third quarter respectively.

Cote D’ Ivory, Senegal, Ghana and Kenya

In the review note, GTI Observed that comparatively, economic growth was solid in Cote D’ Ivory, Senegal, Ghana and Kenya with annual GDP growth printed at 7.4%, 7%, 6.2%, and 5.5% respectively in 2018.

Read Also: “Nigeria, Ghana, SA account for more than 40% of SSA Eurobonds Issuance”

It happened that many Sub-Saharan countries battled unfavourable foreign exchange conditions in 2018 as the U.S. dollar strengthened against many of the region’s currencies.

This came on the back of multiple interest rate hike in the U.S., which in-turn triggered massive investment outflows from EMDEs ,including Sub-Saharan African, to the U.S.

According GTI Securities, top affected currencies in the region includes Angola Kwanza which was down by 86% against USD, then South Africa Rand down by 16.28% against USD, Ghana Cedi also slopped down by 8.05% against USD, and Senegal and Cote D’ Ivory CFA Franc were down by 4.7% against USD, save for Kenya Shilling which appreciated by 1.27% against the greenback.

In terms of new foreign debt incurred, the value of Eurobond floated by SSA countries reached a record high of $17.5 billion in 2018, with Nigeria ($5.5 billion) and Angola ($3.0 billion) accounting for nearly 50% of the total floats, aside bilateral loans from China and other Western countries.

Against this backdrop, the IMF during its annual spring meeting in April 2019 cautioned Nigeria and other SSA to reduce their debt intake amidst weak revenue prospects.

However, the latest announcement from the Nigeria’s debt management office revealed that the nation’s debt stock has hit N24.9 trillion as at the end of the first quarter in 2019.

Analysts estimated that by the end of 2019, there is tendency that Nigeria’s debt load would hit N30 trillion mark.

Nigeria, SA, Angola sluggish performance slowdown SSA economy

VIAJulius Alagbe
SOURCEMarketForces Africa
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