Sub-Saharan Africa growth resilient to lower oil prices in 2015 – Fitch

December 18, 2014

In its latest sub-Saharan Africa (SSA) Credit Overview released December 16, 2014, Fitch Ratings says that it expects average GDP growth of 5 percent in 2015, for the 18 countries rated by the agency, up from 4.5 percent in 2014.

Growth will not be evenly spread across the region but should be resilient to lower oil prices.

Countries’ ability to grow will be impacted by their degree of commodity dependence, exposure to China, domestic challenges and capacity to invest.

Growth in Nigeria, Sub-Saharan Africa’s largest economy, has been revised down from 6.4 percent to 5.2 percent for 2015, as a result of lower oil prices and tighter policy.

This will be offset by an uptick in South Africa’s growth, although challenges in the electricity sector may see growth underperform.

Oil importers and countries with the fiscal space to invest will continue to grow robustly.

Inflation is expected to moderate across the region due to lower oil and agricultural prices. Public finances will remain expansionary, with the average budget deficit rising to 4.9 percent of GDP in 2015, from 3.9 percent in 2014 and 0.8 percent in 2011.

Over the same period, the average current account will swing from surplus into deficit.

Lower oil prices will dampen growth in Angola, Nigeria and Gabon, which will also see external and fiscal balances worsen.

However, most SSA countries are significant oil importers – oil makes up around 20 percent of the import bill in Kenya, Cote d’ Ivoire, Seychelles and Ethiopia – and will therefore be beneficiaries of lower prices.

Foreign investment and export performance could be undermined in Zambia and Mozambique, due to lower commodity prices and close trade ties with China.

Home-grown challenges will hamper growth and could weigh on ratings over the coming year in Ghana and South Africa. Growth in South Africa will be held back by challenging labour relations, electricity shortages and weak private sector investment.

BussinesDay 18/12/2014

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