S&P sees weaker 2023 growth in key African economies as tailwinds fade

JOHANNESBURG (Reuters) – Economic growth in key Sub-Saharan African economies will slow this year as weaker global growth makes the backdrop less favourable and high interest rates deter investment, ratings agency S&P said in a research report.

S&P said it now forecast the gross domestic product of eight Sub-Saharan African economies it tracks would expand 2.9% in 2023, down from 3.4% in 2022.

Its latest forecast is slightly more gloomy than a research report from June last year that predicted 2023 growth of 3.2% for seven African economies.

This year’s report included economic forecasts for Angola, Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Mozambique, Nigeria and South Africa. S&P’s 2022 report did not feature Mozambique forecasts.

“The economic environment remains far from growth friendly, reflecting elevated policy uncertainty and above-average systemic financial stress,” S&P said. “Policymakers face a tricky trade-off between public debt management, especially given higher interest rates, and macroeconomic stability.”

However, the end of the COVID-19 pandemic, the reopening of tourism and services sectors, and falling food and fuel prices should bring some relief, S&P added.

S&P now forecasts South Africa’s economy will grow 0.7% this year, down from a 1.6% forecast given in June 2022 because of an intensifying electricity crisis.

Democratic Republic of Congo and Ethiopia were poised to be the growth leaders in 2023 with GDP expansions of 6% this year, supported by mining in Congo and a recovery in investment in Ethiopia after a ceasefire between the government and Tigray forces, S&P said.

Looking to 2024, S&P projected average growth of 3.4% in the eight countries.

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