Lower oil prices will reduce growth in sub-Saharan Africa’s major petroleum producing countries and push governments to implement significant policy adjustments, the International Monetary Fund said on Tuesday.
Sub-Saharan Africa growth could slow to 4.5 percent this year from 5.0 percent in 2014, largely because of weaker oil prices, according to the IMF, which forecast growth rising to 5.1 percent in 2016.
“For the eight oil exporters, (lower prices) will pose a formidable challenge and, with limited buffers, will require them to undertake significant fiscal adjustment,” said the IMF in its Regional Economic Outlook report.
“Oil exporters are facing a challenging environment and their growth in 2015–2016 is expected to average 4.75 percent, substantially marked down from 7 percent expected in October 2014,” it said in the publication issued twice each year.
In Nigeria, the continent’s biggest economy and largest oil exporter, authorities are cutting capital spending and have also adjusted monetary and exchange rate policies to relieve pressure on public finances and the currency.
Nigeria’s real GDP growth in 2015 and 2016 is expected to average 5 percent, above the forecast for sub-Saharan Africa as a whole, but still down from the 7.5 percent projected by the IMF in October 2014, the report said.
Angola, the continent’s second largest oil producer, should see 4.25 percent real GDP growth in 2015-2016, compared with 5.50 percent between 2012 and 2014.
Average growth in 2015-2016 is expected at 4.25 percent in the Economic Community of Central African States, which includes oil exporters Gabon and Equatorial Guinea, compared with a projection of 5 percent over the period made last October.
That growth rate, however, requires sound fiscal management and an increase in oil production and there is a risk the figure will not be achieved, the report said.
The impact of the commodity price decline is small in much of the rest of the region. Average real GDP growth projections are broadly unchanged there since last October at 4.75 percent in 2015-2016 and about 6.0-6.50 percent when South Africa, sub-Saharan Africa’s second largest economy, is excluded.
South Africa is expected to grow at around 2 percent over the period.
“Lower oil prices represent a favourable development which, however, will be partly offset in some cases by lower prices of other commodities that they export,” the report said of countries that do not export oil.