Strong Growth in Sub-Saharan Africa, but Pockets of Difficulty

Infrastructure, services, agriculture driving growth in most economies

Positive outlook overshadowed by Ebola impact in affected countries

Goals are high, inclusive growth and addressing fiscal risks in a few countries

In most countries, growth benefits from a combination of infrastructure investment, expanding services, and robust agricultural production. Growth momentum remains particularly strong in Nigeria, the region’s largest economy, and in the region’s low income countries. Recent revisions of national accounts data, notably in Nigeria, have also revealed that the economies of the region are more diversified than previously thought, highlighting in particular the large role played by services.

The IMF’s latest Regional Economic Outlook for sub-Saharan Africa projects regional GDP growth to pick up from about 5 percent in 2013-14 to 5¾ percent in 2015. This overall positive outlook is however overshadowed by pockets of acute difficulty in a few countries. In Guinea, Liberia, and Sierra Leone, the Ebola outbreak is exacting a heavy human and economic toll. In addition, the security situation continues to be difficult in some countries, including the Central African Republic and South Sudan.

In a few other countries activity is facing headwinds from domestic policies. In South Africa growth remains lackluster under the drag of difficult labor relations, low confidence, and inadequate electricity supply. More worrisome, in a few countries, including Ghana and, until recently, Zambia, large macroeconomic imbalances have resulted in pressures on the exchange rate and inflation.

Rising vulnerabilities

A more protracted Ebola outbreak or a wider extension of the epidemic could have severe consequences for the economy of the region, as it would undermine trade, transport activities, and investment. In other parts of sub-Saharan Africa, a deterioration of the security situation could also have severe regional spillovers.

In a few other countries, rapid growth has masked increasing fiscal vulnerabilities, especially where large deficits have been prompted by an acceleration of recurrent spending.

Less supportive environment

During the past decade, growing links with emerging markets have supported the region’s expansion and economic diversification but have also increased its vulnerability to external shocks (see chart).

Although global growth is projected to gradually strengthen, an expected deceleration in emerging markets and a...