African economy shows no sign of recovery in 2016
The sub-Saharan African economy could face a serious decline in 2016, far behind the rest of the economies in the world. The African economy is expected to fall in the entire year in 2016, worsening poverty in the continent.
The economic activities in the zone are anticipated to fall to 2.9%, compared to a 3.5% decline in the previous year according to consultancy firm Capital Economics. Based on the forecasts by the International Monetary Fund the current economic outlook would be the lowest growth rate since the year 1999. Meanwhile, global economic growth is anticipated to reach at 2.8% or 3%, according to the macroeconomics research house.
The global growth outlook increased the anxiety over the fading African economy behind other economies in the world, the first time since the year 2000. The zone's per capita growth is anticipated to remain flat with an increase in population rate at 2.5%. While the global per capita growth is expected to have an expressive increase in 2016 with population growth rate at 1.2%, as reported by Financial Times.
Nigeria, one of the largest economy in the continent, is anticipated to register a top-line growth of 2%, which is lower than the population growth of 2.8% predicted by the IMF. However, unanimous outlook collected by Bloomberg point to an economic growth of 3.7%. In South Africa, Capital Economics predicts growth to be 0.5% with the consensus outlook of 0.9%, well below the population growth of 1.6%.
According to Yvonne Mhango, an economist for the sub-Saharan region at Renaissance Capital, the economic numbers have failed since 2015 and that there is no sign of recovery in 2016. He blamed the economies of South Africa and Nigeria for the failing growth in the zone.
Meanwhile, a data suggested that the economy in South Africa has shown some signs of growth over the previous two months. However, analysts view this slight change to be short-lived since the ongoing political turmoil and the poor global economy will put a brake on the country's growth. The Central Bank expects the country's economic activities to improve merely 0.8% in 2016, CNBCAFRICA reported.
Confidence in the country's business activities has grown in the recent time propelled by better volumes of product import and export, but factory production weakened from the past month. "The economy is still looking very bad. There are signs that the world economy is possibly stabilising, but that won't save us from slower growth this year," John Loos, consumer tactician at First Rand Bank.
Standard & Poor's on Wednesday lowered its growth outlook for South Africa to 0.8% from 1.6%, according to IOL. Investors are curious over the ongoing speculation that Fitch and S&P's may lower the country to "junk" rating.
African economy is hampered by the ongoing price crises in the oil market. The continent's poor growth outlook signals no sign of recovery in 2016.