The consulting firm Fitch Solutions today estimated that sub-Saharan Africa will grow 2.9% this year, after contracting 3% last year, well below the 4% average recorded over the last decade.
According to the forecast update, analysts at this consultancy owned by the same owners of Fitch Ratings estimate that the region will face a “tightening” in fiscal policy in most countries “when economic stimulus packages are withdrawn this year.”
In the Southern African region, where the Portuguese-speaking countries of Angola and Mozambique are included, Fitch Solutions estimates that governments “face the dual challenge of accessing and then administering Covid-19 vaccines” and adds that “distribution is also likely to be challenging due to limited transport infrastructure.”
On Angola, Fitch Solutions says it will take three years for the country to reach the growth recorded in 2019 and cites the “unattractive operating environment” as one of the structural constraints limiting the region’s growth outlook.
“We expect a modest recovery in Angola in 2021 after five years of recession, with GDP recovering from a 5.2% contraction to grow 1.7% this year,” the analysts write.
Inflation is expected to stay at 19.7% this year and “the Central Bank is not expected to lower interest rates by more than 0.5 percentage points to 15% by the end of the year, which will keep access to credit expensive for the private sector.”
Regarding fiscal policy, Fitch Solutions forecasts that the deficit will improve from 1.7% in 2020 to 0.4% this year due to “the slowdown in fiscal spending in the coming quarters due to the implementation of a fiscal adjustment, which will limit the strength of the economic recovery.”
