East African countries are tipped to have the fastest growing economies in Sub Saharan Africa in the coming months, a team of market analysts has affirmed.
Economic growth in Sub-Saharan Africa remained relatively strong in 2017 with the region’s average gross domestic product (GDP) growth for the first three quarters of 2017 coming in at 2.4%, researchers from financial services firm, Cytonn Investments revealed.
According to the International Monetary Fund (IMF) October’s World Economic Outlook Update for 2017, Sub-Saharan Africa (SSA) was expected to grow at a rate of 2.6% in 2017, from a two-decade low of 1.4% in 2016.
“This is primarily due to recovery of Nigeria, brought about by a recovery in oil production, recovery of oil prices and growth in the agricultural sector,” the Cytonn team said in a recent statement.
East Africa is expected to be the fastest growing region, with an expected GDP growth rate of 5.4% in 2017, owing to growth of 6.5%, 5.2%, 5.0% and 4.4%, in Tanzania, Rwanda, Kenya and Uganda, respectively. In Western Africa, Ghana is expected to grow by 7.9%, according to a Bank of Ghana estimate, while Nigeria’s 2017 GDP growth expectation is at 0.8%.
The company, which is known for its investments in real estate and real estate, said this was mainly driven by improvements in commodity exporting countries, which benefitted from a recovery in global commodity prices and stronger global growth that resulted into increased commodity demand.
“South Africa continues to drag down growth with 2017 GDP growth being downgraded to 0.7% from 1.0% previously by the IMF, citing the political uncertainty that has led to decreased investor confidence in the country,” Cytonn researchers explained.
Regional currencies registered mixed performance in 2017, with a number of currencies gaining against the dollar. Cytonn researchers also noted that most of the equities markets recorded gains during the year, highlighting improved investor sentiment owing to improving macroeconomic conditions and a relatively stable political landscape in the continent.
The company expects 2018 to be a better year for some sectors in Sub-Saharan Africa.
The firm has stated that countries like Kenya can expect their real estate sectors to record improved performance.
“Generally, we expect the residential market to pick up in 2018 with better performance continuing to be recorded in the mid and low mid end segments as investor appetite for the same continues in a bid to curtail the housing deficit, while also gaining impetus further from the expected government’s affordable housing initiative and probable increase in credit to the private sector,” the firm said in a statement.