Slow growth for Nigeria, but SA, Ghana, Kenya, Morocco, Egypt fastest in 2021

Morocco, Kenya, Ghana, Egypt, and South Africa have been projected to post the fastest growing economies in Africa this year, according to a report just released by GlobalData, a leading data and analytics company, made available to businessamlive.com.

All five projected fastest growing economies for 2021 are all forecast to register above 4 percent of real GDP growth in 2021, while Nigeria is projected to grow below average at merely above 2 percent.

Africa, having witnessed its worst recession in 50 years in 2020, the economy has been forecast to grow at a healthy rate of 3.8 percent in 2021, and GlobalData says the healthy growth for the continent will be largely driven by increasing global demand, resulting from eased restrictions of the COVID-19 lockdown across the continent, untapped market opportunities, a rebound in commodity prices and a rise in oil prices.

Nigeria, notably the largest economy in Africa by gross domestic product (GDP), is forecasted to jump out of economic recession in 2021 with, however, a slower growth pace at 2.3 percent than other sub-Saharan nations. The slower pace of recovery from the recession, according to the report, is hinged on some major roadblocks including heightened insecurity, rising food inflation, rising debt service payments and stalled reforms affecting Nigeria’s recovery process.

According to the report, Africa, in addition to the support of various governments, is attracting global investors due to its vast resource base and untapped market options. It recalled the recent UK pledge to invest $4.5 billion in Africa by 2022, which is expected to create jobs and accelerate economic activities.

The GlobalData report also highlighted the 20 percent decline in FDI inflows to the African region, subdued by commodity prices and pessimistic investor sentiment, amid the COVID-19 pandemic.

However, untapped markets and structural transformation are likely to speed up the momentum in FDI flows in the coming years, the report noted, adding that with an increase in energy demand anticipated, resource-seeking investments may increase in H2 2021.

The importance of regional value chains and full implementation of African Continental Free Trade Agreement will create new opportunities for African economies.

Gargi Rao, economic research analyst at GlobalData, said, “Morocco has been moving ahead in leaps and bounds in recent years, having provided the world with produce following promising agricultural seasons. The country’s expected growth of 5.19 percent was also influenced by its effective vaccination drive, accommodative monetary policies and fiscal stimuli.

“Strong banking fundamentals and a rise in external demand for commodities is expected to help recovery in South Africa, which is predicted to see 4.09 percent growth. However, this has been hampered by recent protests in the country. Private consumption growth is to remain the major driver of economic growth in Egypt,” he continued.

Drawing attention to the investments inflows into the African economy, Rao noted that significant currency depreciation has occurred in several African countries as a result of decline in external reserves flows, portfolio investments and a rise in public debt, adding that this may cast a shadow on recovery, but governments’ focus on counter-cyclical easy monetary policies and fiscal stimulus packages will aid African region’s economic recovery in 2021.

“The need of the hour is to continue support to health sectors to cope with the resurgence of COVID-19 cases along with sustained fiscal and monetary support. To avoid reversing the progress made on poverty reduction, governments need to expand their social safety nets and make growth inclusive and more equitable. To achieve a faster economic recovery in the second half of 2021, Africa’s policymakers need to accelerate structural transformation through digitalization, industrialization and diversification,” Rao concluded.