SSA: In Recovery

SSA growth set to recover. This week saw the IMF formally release its global growth forecasts. As expected, these showed a pickup in aggregate Sub-Saharan African GDP growth to 2.6% in 2017 and 3.5% following a 1.4% crawl last year which was lower than the rate of population growth. Some of the pickup reflects firming demand in the rest of the world, which boosts SSA trade and investment as well as commodity prices.

Driven by brighter prospects in Nigeria, South Africa and Angola. In a mechanical sense, developments in the aggregate SSA figure are overwhelmingly driven by activity the three nations which collectively account for around 60% of SSA output, namely Nigeria, South Africa and Angola. All three had a forgettable 2016 with the former falling into recession and Angola stalling as both scrambled to respond effectively to lower oil prices. Meanwhile, adverse weather conditions, power shortfalls, political uncertainty and subdued business and consumer sentiment pushed South Africa to the brink of recession. A mixture of easier external conditions and policy responses should underpin gains in all three nations, although South Africa's political backdrop and high dependence on foreign sentiment remains a key risk.

But developments elsewhere are also largely positive. The pickup in average SSA growth is also broad-based with only 11 of the 45 nations forecast to face a slowdown in 2017. Most of the growth declines are fairly shallow with Gabon experiencing the largest easing of 1.3 percentage points to 1% this year. It is also worth noting that the group includes Cote d'Ivoire, Ethiopia, Guinea-Bissau, Kenya, and Mali who are all forecast to grow by at least 5% this year and that all the countries that suffered a contraction in 2016 are set to see an improvement this year (see table).

SSA back meaningfully among the fastest growers. Finally, if one ignores Libya, whose projected 54% pickup in activity this year follows conflict-related declines of 30%, 48%, 7% and 4% over 2013-16, then SSA nations are expected to make up half of the 10 fastest growing economies this year, following compared to 2 (Cote d'Ivoire and Ethiopia) in 2016. Makes a nice soundbite.