The ongoing trade war between the United States of America and China is hurting Africa economy due to the fall in commodity prices, leaving exporters badly affected.
This is the findings of ICAEW, the Institute of Chartered Accountants in England and Wales in its reports: Economic Update: Africa Q3 2019.
The report provides GDP growth forecasts for various regions in the Continent, namely East Africa which is set to grow by 6.3 per cent, West and Central Africa at 3.4 per cent, Franc Zone at 4.7 per cent, and Southern Africa at 1.3 per cent.
The report predicts that Africa’s growth rate is set for a sluggish pace after a disruption in oil production in North Africa and with low international oil prices in Francophone Africa.
The plight will be further boosted by policy uncertainty, concerns over debt-landed parastatals and high unemployment in South Africa.
Speaking during the launch of the latest report, Michael Armstrong, ICAEW’s Regional Director for Middle East, Asia and Africa, said that the growth of some regions in Africa is being held back by the fluctuating price of oil.
Regional GDP growth for Central and West Africa is forecast at 3.4 per cent in 2019. This incorporates the impact of the Nigerian economy’s slow start to the year, as pipeline damage curtailed its oil production.
He said: “The growth forecast for the Franc Zone this year is 4.7 per cent, due to a structurally low international oil price environment, which continues to weigh on growth in the region’s oil exporters.
“While still expected to remain the strongest growing region on the continent, East Africa is projected to record a slightly lower real GDP growth rate of 6.3 per cent this year compared to 2018. The fact that the countries in the region are not as reliant on commodities as sources of income shields them from global shocks”, he added.
For Uganda, which has developed its hydrocarbon, GDP growth is forecast above 6 per cent yearly over the medium term.
However, extended delays in oil exploration and the widening twin deficits (due to an increase in public debt and increasing capital goods imports to support the nascent hydrocarbons sector) pose significant downside risks.
Uganda, in partnership with Tanzania, plans to build the East African Crude Oil Pipeline, which is worth $3.5bn.
In North Africa, the GDP growth rate is forecast to slow to 2.8 per cent due to fluctuations in oil production in Libya, which compounded the effect of weak Eurozone demand on the region’s other economies.
Southern Africa is forecast to keep struggling, with a growth rate of 1.3 per cent in 2019. The region’s economic anchor, South Africa, is expected to show nearly-flat growth because of policy uncertainty, concerns over debt-laden parastatals and high unemployment. In the region’s other countries growth has been slowed by supply-side challenges, notably adverse weather conditions in the wake of two cyclones, a regional rainfall deficit and power rationing.
