Is Sub-Saharan Africa's Economic Surge Already Over?

In recent years, much has been made of the fact that economic growth rates in Sub-Saharan Africa have exceeded those of most other regions of the world.  In fact, most economists believe that Sub-Saharan Africa’s economy will continue to expand at a more rapid pace than that of any other region apart from Asia in the coming years.  However, growth rates in many of Sub-Saharan Africa’s leading economies have fallen in recent years as natural resource prices have fallen and as political unrest continues to impact a large number of countries in this region.  Moreover, there are increasing concerns that the region will be unable to return to the high economic growth rates of previous years as external and internal factors hold back growth in the region.

Between the years 2004 and 2008, the Sub-Saharan African economy expanded by an average of 6.8% per year, the highest rate of economic growth outside of emerging Asia.  As in the rest of the world, economic growth in Sub-Saharan Africa slowed in the wake of the global financial crisis, with the region’s economy expanding by 5.0% per year since 2009.  While this represents a slowdown, Sub-Saharan Africa has grown at a much higher rate than most other regions since the financial crisis, with growth boosted by continued high levels of demand for the region’s natural resources as well as by its expanding domestic market.  Moreover, the rapid expansion of the oil and gas industry in the region helped to boost the economic growth rates of a number of Sub-Saharan African countries in recent years.  As a result, while the region’s economy has slowed in recent years, it has weathered the recent turbulence facing the global economy much better than most other regions.

Looking ahead, we expect economic growth rates in most of Sub-Saharan Africa to accelerate slightly in the years ahead, boosted by continued high levels of demand for the region’s natural resources and by the increasing levels of purchasing power for many of the region’s inhabitants.  However, a number of factors could combine to further weaken the Sub-Saharan African economy in the years ahead.  First, China’s economic slump could worsen in the coming years, further dampening demand for the region’s natural resources.  Moreover, oil prices are unlikely to rise sharply in the coming years, reducing foreign investment in Sub-Saharan Africa’s oil and gas industry and leading to increasing competition for export markets for the region’s oil exports.  Meanwhile, the threat of political unrest remains high in many areas of the region and is not forecast to fall significantly in the coming years.  Finally, while growth in the region’s domestic markets has been impressive in recent years, that fact remains that Sub-Saharan Africa is the world’s poorest region and will remain so for the foreseeable future, preventing the region’s market from reaching its true potential.  Altogether, Sub-Saharan Africa will remain one of the fastest growing regions in the world, but growth rates will not reach the levels that had been hoped for over the coming years.