Absa’s 2022 growth outlook for SSA

Sub-Saharan Africa is facing a delicate balancing act as regional central banks grapple with the twin challenges of rising inflation and the looming threat of a fourth wave of the pandemic. Absa Group's sub-Saharan Macroeconomist, Ridle Markus, shed light on the current economic landscape and the potential implications for growth in 2022. In recent months, several major economies in the region, including South Africa, have witnessed rate hikes by their central banks in response to mounting inflationary pressures. Markus noted that the high inflation rates, fueled by increased transport costs and global commodity prices, have prompted central banks to consider preemptive rate hikes earlier than anticipated. Countries like Ghana and Zambia have already raised their policy rates, with more expected to follow suit in 2022. The debate surrounding global inflation and its impact on Africa has been a point of contention. While some argue that inflationary pressures are transitory, central banks in the region are taking a more cautionary stance, recognizing the potential for sustained inflationary trends. Markus highlighted the various challenges facing the continent, including currency depreciation, higher import prices, supply chain disruptions, and escalating food and staffing costs. Looking ahead to 2022, Markus expressed cautious optimism about the region's economic recovery but underscored the need to navigate the uncertainties posed by the pandemic. With vaccination rates slowly improving but still below target levels, the outlook for sectors like tourism remains uncertain. The potential for a resurgence of COVID-19 cases, coupled with the emergence of new variants, could dampen growth prospects and require a recalibration of growth forecasts. Despite some optimism about the economic outlook, Markus emphasized the importance of recognizing the ongoing risks and challenges that could impede progress. The delicate balance between managing inflationary pressures, pandemic uncertainties, and growth aspirations will shape the region's economic trajectory in the coming year. As Sub-Saharan Africa braces for the possibilities of a challenging yet hopeful 2022, policymakers and businesses alike will need to remain vigilant and adaptable in navigating the twists and turns of an evolving economic landscape.