CAPE TOWN: The World Bank says firmer commodity prices in 2016 could boost the economic growth prospects of most countries in the Sub Saharan Africa region.
According to the World Bank’s Global Economic Prospects, the region is expected to grow 4,2 percent this year, from 3,4 percent in 2014.
With the current electricity constraints being experienced in most countries expected to persist as well as the drought in Southern Africa, the region is likely to record a somewhat weaker recovery in 2016 than previously anticipated.
However, an easing of the power constraints, better fiscal policy measures and continued stability in commodity prices are likely to impact positively on growth.
“Commodity prices are expected to stabilise but remain low through 2017. Although governments are taking steps to resolve power issues, electricity supply bottlenecks are expected to persist. There are, however, considerable variations within the region. The fiscal policy stance in commodity exporters is expected to ease gradually as commodity prices stabilise,” the report said.
According to Global Forecasting Services, the commodity market is poised for some recovery.
“Although we expect commodity prices to remain well below their 2011 peak in years to come, 2016 will be a year of stabilisation, with our aggregate commodity price index registering a modest 2.6 percent rebound. This will be driven by a mild increase in oil prices, which will feed into the price of other commodities.”
Besides the fall in commodity prices, African countries have had to contend with depreciation of local currencies against the US dollar which led to most countries allowing their exchange rate to adjust, especially among oil exporters.
The region’s pattern of exports makes it particularly vulnerable to commodity price shocks. Fuels, ores, and metals accounted for more than 60 percent of the region’s total exports between 2010 and 2014 compared with 16 percent for manufactured goods. Lower commodity prices obliged a fiscal tightening in several commodity exporters, which caused a sharp slowdown.
Since October last year, Angola, Nigeria, Ghana, South Africa, Tanzania, Uganda and Zambia’s currencies have experienced depreciations of significant magnitude, reflecting existing or rising domestic vulnerabilities.
