A peek into the African economy in 2011

Every year, Standard Chartered Bank’s Africa Research department puts out its projection for economic growth in a number of key sub-Saharan African countries.

Basing its data on its own computations, several research papers and on institutions such as the International Monetary Fund and the Food and Agricultural Organisation, the forecasts are useful guides for those looking for indicators on a continent that has over the last decade provided the strongest growth bar Asia.

This year, the London-headquartered bank picked on the economies of South Africa, Botswana, Zambia, Tanzania, Kenya, Uganda, Ghana and Nigeria.
The data and forecasts are based on the eight countries only, but are a reliable microcosm of the sub-Saharan economy.

Overview
The bank projects a real GDP growth rate of 5.9 per cent in 2011, up from 4.4 per cent in 2010 and higher than the IMF’s 5.5 per cent forecast for 2011.

The external environment—mainly trade with main economic partner Europe will inform this, but given the economic uncertainty in the West, its commerce ties with Asia—read China—may act as a bulwark against any dip.

"However the external environment is still characterised by some uncertainty, and overall risks remain," notes the bank.

However Africa’s share of export GDP is still too little to compensate for any such downturn, and domestic factors such as internal consumption may provide some gain, as will a resumption of private sector borrowing.

A lot of credit has been given to many African countries for counter-cyclical policies that helped stave off the brunt of the crisis, even through may documented problems with transmission of such policies.

The challenge will be the withdrawal of these policies such as stimulus packages without upsetting the deficit balance.

The strongest growth will however come from the oil-producing economies—which were hardest hit—with new producers such as Uganda and Ghana expected to also see an uptick in their real GDP.

East Africa, the clear winner in the region over the crisis, will continue on a strong growth momentum with South Sudan’s referendum decision a key influence.

"Access to ports will be an important consideration, and Kenya looks set to benefit strongly from regional infrastructure development," adds the bank.

Southern Africa is forecast to record muted growth with key economies that saw the worst of the recession such as South Africa and Botswana struggling to regain their footing.

A number of countries have plans to issue a Eurobond, but a conducive environment in target markets will be key to this. Low interest rates in the West and an expected correction in domestic rates are a positive sign.

With over a dozen countries going to the ballot this year, political events will also be closely watched and could have a bearing on the continent’s economy.

Key elections to watch will include Nigeria and Uganda’s presidential votes. Kenya’s dalliance with the International Criminal Court will also be one to keep an eye on.

"Politics could all too easily influence real economic performance."

South Africa: Regaining Its Firm Footing

Botswana: Can The Diamond Glitter Again?

Zambia: Big Policies, Stronger Growth

Kenya: Plodding Steps Become Steadier

Uganda: Heady Times Ahead But...

Tanzania: Still on Course; Air Pockets Ahead

Ghana: The Challenge of The Oil Curse

Nigeria: A Big--And Tricky--Year Ahead