Tough times ahead for African countries as global economic activity slows

Economic growth in Sub-Saharan Africa (SSA) softened markedly in 2022 to 3.4 per cent as inflationary pressure, weak external demand, and tighter global financial conditions, tempered post-pandemic recoveries in many countries. Food price pressures, already significant even before the pandemic, have intensified further because of adverse weather shocks, supply disruptions worsened by Russia’s invasion of Ukraine, increased fragility and insecurity, and, in some countries, large currency depreciations. According to the World Bank, annual food price inflation exceeded 20 per cent in over a quarter of all countries last year, dampening growth in real income and consumer demand, and deepening food in security. A substantial deceleration in global growth and falling non-energy commodity prices have weighed on economic activity across SSA, particularly in metal exporters. Despite a recent easing of global food and energy prices, import costs remained elevated, contributing to widening current account deficits. Pandemic-induced weakness in fiscal positions lingered, with the government debt surpassing 60percent of GDP in almost half of SSA economies last year. Debt sustainability has also deteriorated further in many non-oil-producing countries, leading to rising borrowing costs, capital outflows, and credit rating downgrades “Growth in the three largest SSA economies—Angola, Nigeria, and South Africa—pulled back sharply