Prevailing low pros- pects in Nigeria and Angola, Afri- ca’s richest oil pro- ducing nations, are projected to see economic growth in sub-Saharan Africa (SSA) slow to 4.2 percent, less than earlier expected, ac- cording to the World Bank’s latest Global Economic Pros- pects (GEP) report.
Low oil prices have con- siderably reduced growth in commodity-exporting countries (Angola, Nigeria), in SSA, and have also slowed activity in non-oil sectors.
Even for South Africa, which ought to be one of the main beneficiaries of low oil prices, the World Bank fears that growth is now being held back by energy shortag- es, weak investor confidence amid policy uncertainty, and by the anticipated gradual tightening of monetary and fiscal policy.
“Growth in the region is forecast to slow to 4.2 percent,slower than previously expected.
“This mainly reflects a reassessment of prospects in Nigeria and Angola following the sharp drop in oil prices, and in South Africa, because of ongoing difficulties in elec- tricity supply,” the Wold Bank notes in the report.
For 2016-17, growth is ex- pected to be only margin- ally higher as these challenges partially offset stronger trading partner growth and the contin- ued expansion in the region’s low-income countries.
Apart from the SSA re- gion, the report worries that developing countries face a series of tough challenges in 2015, including the looming prospect of higher borrow- ing costs as they adapt to a new era of low prices for oil and other key commodities, resulting in a fourth consec- utive year of disappointing economic growth this year.
As a result, developing countries are now projected to grow by 4.4 percent this year, with a likely rise to 5.2
percent in 2016, and 5.4 percent in 2017. “Developing countries were an engine of global growth following the financial crisis, but now they face a more difficult economic environ- ment,” says World Bank Group President Jim Yong Kim. In high-income coun- tries, in contrast, recovery is gaining momentum, as growth in the Euro Area and Japan picks up and the United States continues to expand, despite a weak start to the year.
High-income countries are on course to grow by 2.0 percent this year, 2.4 percent in 2016, and 2.2 percent in 2017. The global economy is likely to expand by 2.8 per- cent this year, 3.3 percent in 2016, and 3.2 percent in 2017, the report further notes.
Risks to the outlook for emerging and developing economies continue to weigh on growth. Lower prices for oil and other strategic commodi- ties have intensified the slowdown in developing countries, many of which depend heavily on com- modity exports.
While commodity im- porters are benefiting from lower inflation, fiscal spend- ing pressures, and import costs, low oil prices have so far been slow to spur more economic activity because many countries face persis- tent shortages of electricity, transport, irrigation, and oth- er key infrastructure services; political uncertainty, and severe flooding and drought caused by adverse climate.
A special analysis in the report finds that low-income countries, many of which depend on commodity ex- ports and investment, are vulnerable in the current environment. During the commodity price boom of the mid-2000s, their economies strength- ened considerably with new discoveries of key metals and minerals, resource invest- ment, and expanding com- modity exports.
ONYINYE NWACHUKWU, Abuja
