By Steve Agbota
Leading data and Analytics Company GlobalData, has predicted that Nigeria, Africa’s largest economy by GDP, will exit recession in 2021.
GlobalData forecasted that the nation’s growth would be at a slower pace than other sub-Saharan African nations at 2.3 per cent.
According to it heightened insecurity, rising food inflation, soaring debt service payments and stalled reforms are major roadblocks to Nigeria’s recovery process.
However, economic research analyst at GlobalData, Gargi Rao, said: “Significant currency depreciations have occurred in many African countries due to a fall in external financial flows, portfolio investments and a rise in public debt which may cast a shadow on recovery.
However, governments’ focus on counter-cyclical easy monetary policies and fiscal stimulus packages will aid African region’s economic recovery in 2021.”
“Having witnessed its worst recession in half a century in 2020, Africa’s economy is forecast to grow at a healthy pace of 3.8 per cent in 2021 driven by rising global demand as restrictions are eased, untapped market opportunities, a rebound in commodity prices and a rise in oil prices.”
Meanwhile, GlobalData has hinted that the fastest-growing economies in the region will be Morocco, Kenya, Ghana, Egypt and South Africa, which are all forecast to register above 4 per cent real GDP growth in 2021.
Rao added: “Morocco has been moving ahead in leaps and bounds in recent years, having provided the world with produce following promising agricultural seasons. The country’s expected growth of 5.19 per cent was also influenced by its effective vaccination drive, accommodative monetary policies and fiscal stimuli.
“Strong banking fundamentals and a rise in external demand for commodities is expected to help recovery in South Africa, which is predicted to see 4.09 per cent growth. However, this has been hampered by recent protests in the country. Private consumption growth is to remain the major driver of economic growth in Egypt.”
In addition to government support, the report hinted that Africa is attracting global investors due to its vast resource base and untapped market options. Recently the UK pledged to invest $4.5 billion in Africa by 2022, which is expected to create jobs and accelerate economic activities.
“FDI inflows declined by 20 per cent in the African region in 2020 due to subdued commodity prices and pessimistic investor sentiment amid the COVID-19 pandemic.
However, untapped markets and structural transformation are likely to speed up the momentum in FDI flows in the coming years.
“With an increase in energy demand anticipated, resource-seeking investments may increase in H2 2021…”