Challenges Ahead: Slower Growth Prospects for Sub-Saharan Africa’s Biggest Economies in 2023

Mouad Boudina
Mouad Boudina
3 Min Read
Slower Growth

Anticipated Poll Results Point to Decelerating Growth for Sub-Saharan Africa’s Largest Economies in 2023 due to Persistent Challenges with Electricity Supply in South Africa, Cash Shortages, Softer Commodity Prices, and the Impact of the Strong US Dollar. Critical Shortages Across the Continent Complicate Economic Activity and Contribute to Inflation Dynamics in Nigeria, Ghana, and South Africa.

The survey conducted from April 19-24 suggests that Nigeria and South Africa, which together constitute more than half of Africa’s gross domestic product, will see their growth rates slow down to 2.7% and 0.4% respectively this year, compared to official figures of 3.1% and 2.0% in 2022. This is expected to have a significant impact on the overall economic prospects of the region.

Jacques Nel, Head of Africa Macro Research at Oxford Economics, has expressed concerns about the economic outlook for households in Sub-Saharan Africa (SSA) in 2023. With two years of high inflation and tightening monetary conditions, Nel has highlighted that SSA households are facing challenging times ahead.

Ghana Grapples with Severe Economic Crisis

Meanwhile, Ghana is facing its most severe economic crisis in decades, characterized by currency depreciation, mounting debt, and elevated interest rates. The Reuters poll reveals that Ghana’s growth rate is projected to further decline to 2.1% in the current year, compared to 3.1% in the previous year. This notable decrease is in stark contrast to the higher growth rates of 5.1% and beyond witnessed in the preceding years, highlighting the significant economic challenges currently faced by Ghana.

Recent times have seen questions arising about Kenya’s fiscal sustainability, although the Reuters poll indicates that the country is expected to achieve a growth rate of 5.0% this year. This reflects a slight decline from the previous year’s growth rate of 5.6%. Despite the anticipated decrease, Kenya’s growth rate remains relatively stable, but concerns persist regarding its fiscal sustainability in the current economic landscape.

Nigeria’s Economic Challenges in 2023 Amidst Commodity Price Slumps

Nigeria has been particularly vulnerable to the impact of commodity price slumps, as oil revenues account for a significant portion of its foreign exchange inflows. Despite the passage of time since the years leading up to the COVID-19 pandemic, Nigeria has not fully recovered from the downturn in oil prices, and the outlook for significant gains in oil prices remains muted.

The combination of these factors, including chronic electricity supply problems, cash shortages, softer commodity prices, and inflation dynamics, is expected to have a notable impact on the growth prospects of sub-Saharan Africa’s largest economies in 2023. As these countries continue to navigate these challenges, finding sustainable solutions to address them will be crucial for their long-term economic stability and growth.

Mouad Boudina

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