COUNTRY REPORT - AFRICA
growth next year. FocusEconomics panelists see the economy growing 2.6 per cent, unchanged from last month’s forecasts. In 2019, GDP is seen expanding 2.9 per cent.
South Africa
Statue of the three Nigerian Tribes lifting the Nigerian Map
Economic woes take a toll on government finances The most recent data suggests that the economy continues to struggle after coming out of a technical recession in the second quarter. In the government’s mediumterm budget policy statement released in October, the government confirmed that the fiscal deficit for the 2017/2018 fiscal year is expected to reach 4.3 per cent, widening from the 3.1 per cent fiscal shortfall observed in the previous fiscal year and the largest fiscal shortfall since 2009. The unemployment rate in Q3 remained extremely elevated at 27.7 per cent, the same print observed in the previous quarter, a bad sign for private consumption. Manufacturing production contracted in September, and the latest PMI data from October point to another month of falling output. The latest batch of economic data and the somber outlook given by the government in the budget policy statement have raised the alarm of a possible credit rating downgrade in late November by Moody’s and S&P Global Ratings, which could set the tone for the key ANC leadership contest in December. The economy is expected to recover in 2018 and 2019 on higher prices for commodities. Growth, however, remains constrained as incessant political noise has stalled implementation of reforms and is weighing on consumer and business confidence. Further credit downgrades or lower prices for commodities could also dent growth. FocusEconomics panelists
expect the economy to grow 1.3 per cent in 2018, and 1.8 per cent in 2019.
Angola New president shakes up government, eyes dismantling monopolies The speed at which the new president has been initiating measures to jumpstart growth in the economy has caught analysts by surprise. Following his inauguration in late September, President João Lourenço has vowed to dismantle state monopolies and has reshuffled key government positions including the Central Bank governor and the secretary of state for oil. While it is uncertain if the president will succeed in pushing through deep-seated reforms, the changes were promising. They coincided, however, with a credit rating downgrade from B2 to B1 by Moody’s on 20 October. The agency noted that the country’s growth outlook remains constrained, despite higher oil prices. Furthermore, persistent weaknesses and imbalances in the economy such as a foreign currency shortage and a weak banking sector have been exacerbated by an increasing debt burden, which has nearly doubled in four years and could rise even further if the kwanza is devalued. The Angolan economy is set to recover moderately in 2018 and 2019 amid higher oil prices. Nevertheless, growth is set to remain constrained as the non-oil sector remains plagued by market distortions, namely FX shortages. FocusEconomics panelists expect GDP to expand 2.5 per cent in 2018, which is down 0.1 percentage points from last month’s forecast. For 2019, growth is expected to reach 2.8 per cent. The Angolan economy is set to recover moderately in 2018 and 2019 amid higher oil prices. Nevertheless, growth is set to remain constrained as the non-oil sector remains plagued by market distortions, namely FX shortages. FocusEconomics panelists expect GDP to expand 2.5 per cent in 2018, which is down 0.1 percentage points from last month’s forecast. For 2019, growth is expected to reach 2.8 per cent. Inflation picked up from 27.5 per cent in September to 29.0 per cent in October. At its most recent policy meeting on 1 November, the Central Bank left interest rates unchanged at their current rate of 16.0 per cent due to lower persistently high inflation. FocusEconomics panelists expect inflation to average 18.6 per cent in 2018 and 13.4 per cent in 2019.
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