Africa’s Macroeconomic Prospects

This chapter reviews macroeconomic conditions in the different regions and countries of Africa, and on the continent as a whole. It highlights past growth trends and projects future growth for 2017-18 based on prevailing global, regional and domestic dynamics and shocks. It examines the main drivers of growth on the supply and demand sides and provides comparisons at the regional level and based on the structure of African economies. The chapter also examines fiscal, monetary and financial sector policies, as well as external positions underpinning recent growth performance that are likely to shape the future growth paths of African countries.

Africa’s economic growth continued to deteriorate in 2016, due mainly to lower commodity prices, with commodity exporters most adversely affected. Despite this trend, the majority of non commodity exporting African countries maintained positive growth. Africa’s growth outlook remains positive for 2017-18, boosted by expected increases in commodity prices and domestic demand. Domestic demand continues to drive Africa’s growth. Meanwhile, better macroeconomic management, increased diversification and an improved business environment will maintain Africa’s growth resilience in 2017-18. Countries with better co-ordinates and consistent fiscal, monetary and exchange rate policies are able to weather shocks. Countries perceived as safe destinations for investments (e.g. because of policy coherence), can accommodate higher external imbalances over longer periods of turbulence, irrespective of their macroeconomic governance fundamentals.