Executive Briefings

Recent Growth Picture Mixed in Africa, But Don't Count the Region Out

Many observers are questioning whether Africa's economic advances are running out of steam. Five years ago, growth was accelerating in almost all of the region's 30 largest economies, but the recent picture has been more mixed: while growth has sped up in about half of Africa's economies, it has slowed in the rest.

Between 2010 and 2015, Africa's overall GDP growth averaged just 3.3 percent, considerably weaker than 4.9 percent a year between 2000 and 2008. But average growth hides a marked divergence, according to a McKinsey Global Institute report Lions on the move II: Realizing the potential of Africa's economies. A much less robust economic performance by two groups of African economies dragged that average down - oil exporters hit by the decline in oil prices and countries affected by the political turmoil of the Arab Spring (Egypt, Libya and Tunisia). For the rest of Africa, growth actually accelerated to 4.4 percent in 2010 to 2015 from 4.1 percent in 2000 to 2010. In addition, long-term fundamentals are strong, and there are substantial market and investment opportunities on the table.

Future growth is likely to be underpinned by factors, including the most rapid urbanization rate in the world and, by 2034, a larger working-age population than either China or India. Accelerating technological change is helping to unlock new opportunities for consumers and businesses, and Africa still has abundant resources. The International Monetary Fund projects that Africa will be the world’s second-fastest-growing region in the period to 2020.

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Between 2010 and 2015, Africa's overall GDP growth averaged just 3.3 percent, considerably weaker than 4.9 percent a year between 2000 and 2008. But average growth hides a marked divergence, according to a McKinsey Global Institute report Lions on the move II: Realizing the potential of Africa's economies. A much less robust economic performance by two groups of African economies dragged that average down - oil exporters hit by the decline in oil prices and countries affected by the political turmoil of the Arab Spring (Egypt, Libya and Tunisia). For the rest of Africa, growth actually accelerated to 4.4 percent in 2010 to 2015 from 4.1 percent in 2000 to 2010. In addition, long-term fundamentals are strong, and there are substantial market and investment opportunities on the table.

Future growth is likely to be underpinned by factors, including the most rapid urbanization rate in the world and, by 2034, a larger working-age population than either China or India. Accelerating technological change is helping to unlock new opportunities for consumers and businesses, and Africa still has abundant resources. The International Monetary Fund projects that Africa will be the world’s second-fastest-growing region in the period to 2020.

Read Full Article