Economic outlook for sub-Saharan Africa

The strong growth momentum evident in many countries in sub-Saharan region in recent years has dissipated of late, as commodity prices and global financing conditions have become less favorable. Operating within this difficult external environment is compounded by generally limited buffers, both on the external and fiscal fronts. As a result, sub-Saharan Africa’s economy is projected to grow this year at an even lower pace than in 2009, before strengthening somewhat in 2016. Although the economic outlook for the region remains very promising over the medium-term due to the improvements on macroeconomic balances and institutions as well as demographic transitions, these medium-term factors can only play a role if the near-term macroeconomic challenges facing many countries are addressed promptly.

On December 11, 2015, the Brookings-Tsinghua Center for Public Policy hosted a public lecture featuring Abebe Aemro Selassie, Deputy Director of the International Monetary Fund’s (IMF) Africa Department. While at the IMF, Selassie has led teams working on Portugal and South Africa, as well as the Regional Economic Outlook for sub-Saharan Africa. He has also worked on Thailand, Turkey and Poland, as well as on a range of policy issues. From 2006-2009 he was the IMF’s resident representative in Uganda. Before joining the IMF, he worked for the Government of Ethiopia.

Selassie discussed his view on the past, present, and future of sub-Saharan Africa’s economy, focusing on why economic growth has recently decelerated in many countries in the region and how policy is key in setting these countries up for better growth in the future. He identified three main factors that have underpinned sub-Saharan Africa’s performance in recent years, and pointed out the diminishing of two of these factors as the reason for the recent slowdown in economic growth. While sub-Saharan Africa’s policies and institutions remain strong, capital inflows and high commodity prices which once drove growth in the region are no longer prominent supporting factors. These recent developments in Sub-Saharan Africa have many implications for its economic policies, and Selassie is working to identify appropriate policies to address the aforementioned challenges that many countries in the region are facing.