Sub-Saharan Africa’s growth will slow in 2015 to four per cent from 4.5 per cent in 2014; this is according to World Bank projections.
The Bank says the downturn largely reflects the fall in the prices of oil and other commodities, notes Africa’s Pulse, a twice-yearly World Bank Group analysis of the issues shaping Africa’s economic prospects.
(READ MORE: Nigeria’s budget deficit under threat after oil price drop)
The 2015 forecast is below the 4.4 per cent average annual growth rate of the past two decades, and well short of Africa’s peak growth rates of 6.4 percent in 2002-08. Excluding South Africa, the average growth for the rest of Sub-Saharan Africa is forecast to be around 4.7 percent.
“Despite strong headwinds and new challenges, Sub-Saharan Africa is still experiencing growth. And with challenges come opportunities,” says Makhtar Diop, World Bank Vice President for Africa.
“The end of the commodity super-cycle has provided a window of opportunity to push ahead with the next wave of structural reforms and make Africa’s growth more effective at reducing poverty.”
The report added that African exports still dominated by primary commodities.
“Sub-Saharan Africa is a net exporter of primary commodities. Oil is the most important commodity traded in the region, followed by gold and natural gas,” read the statement from the Bank.
“Over ninety per cent of the total exports of eight major oil-exporting countries come from the three biggest exports of each country, which represent nearly 30 percent of their GDP.”
(READ MORE: Sub-Saharan Africa the next big growth story)
The African Pulse also revealed that the prices of other commodities are now more closely correlated both with oil prices and with one-another.
“As a result, terms of trade are declining widely among most countries in the region. The 36 African countries with expected terms-of-trade deterioration are home to 80 per cent of the population and 70 per cent of the economic activity in the region.”
According to the report, Nigerian growth is expected to rebound in 2016 and beyond, driven by a relatively diversified economy, and a buoyant services sector.