BY GRACE AIRHULE
The African Export and Import Bank (Afreximbank) has revised its growth forecast for Africa downwards with a downcast outlook of 3.9 percent instead of the 4.2 percent optimism it earlier expressed.
In its 2022 growth report titled, “Africa’s 2022 Growth Prospects: Poise under Post-Pandemic and Heightening Geopolitical Pressures,” showed that the new estimate, though slightly lower than the International Monetary Fund’s earlier forecasts of around 4.3 percent, reflected increasing resilience in the region and also showed that the economic expansion of 16 countries (about 30 percent of all African nations) will exceed five per cent in 2022.
The export focused bank said the unbalanced nature of the commodity price shock will emerge as a growth accelerator for some of the largest export-based economies in the region.
The report also said Africa’s banking sub-region will be supported by the usual assortment of strong performers of some West African countries including, Benin, Côte d’ivoire, Ghana, Guinea, Senegal and Nigeria, where the purchasing managers’ index (PMI) increased to 57.3 in February 2022, its largest expansion since November 2019.
Afreximbank pointed out that African-issued sovereign bonds were mostly oversubscribed, indicating global investors’ increasing confidence in the region’s growth prospects.
However, the balance of risk to the baseline forecasts for African growth tilted downwards as the continent’s economic growth remains in a challenging global environment to which inflationary pressures, the Ukraine crisis, have added another twist to pandemic related uncertainty and supply chain problems.
Tightening global financial conditions in response to a large inflation overshoot was also identified as a major hazard that could generate disproportionate increases in risk spread, as well as capital flow reversals and heightened stagflationary risks.
Despite facing COVID-19 pandemic, encountering geopolitical tensions amid the negative effects of conflict and insecurity, especially in the Sahel region, Africa’s growth is expected to grow further in the near term, with members of the Economic Community of West African States (ECOWAS) expected to gain significant growth in the year under review.
Afreximbank also noted that the telecommunications and financial services sectors are increasing growth resilience in Nigeria, while the oil sector is also expected to also gain interest with the support of a gradual easing of OPEC production cuts and higher prices.