8 September 2015
The slowdown in China and the associated ending of the commodity super cycle is having a major influence on the immediate growth prospects for Africa, with the former African Development Bank chief economist forecasting that growth rates will come under pressure this year and next.
Professor Mthuli Ncube, who is now a public policy professor at the University of Oxford, is forecasting African growth of 4.5 % this year and says that the region’s economy is unlikely to expand by more than 5 % in 2016.
The figure is more or less in line with the International Monetary Fund’s (IMF’s) most recent update of 4.4 % for 2015 and 5.1 % next year.
However, it is a material pullback from rates of well above 5% over the past number of years. The IMF has also warned of increased risks to emerging markets, including lower growth in China, which could either take the form of a moderate slowdown, or a “harder landing”, which would “produce sizeable spillovers, slowing global trade and putting additional downward pressure on commodity prices”.
Ncube told Engineering News Online that the slowdown in the world’s second-largest economy is already reverberating across the continent and is having a particularly acute effect on oil exporting countries, such as Angola and Nigeria.
He also expects the impact to be felt in slow-growing South Africa, which “continues to disappoint”. The South African economy shrank by 1.3 % during the second quarter and few are expecting the economy to grow by the 2 % level forecast at the start of the year.
China’s slowdown is transmitted to African economies through various channels, including lower commodity prices and declines in trade and foreign direct investment levels.
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