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

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.

Economic growth in key Sub-Saharan African economies will slow this year as weaker global growth makes the backdrop less favorable and high-interest rates deter investment, rating agency S&P said in a research report. S&P said it now forecasts 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, the 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. The 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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