October - December 2017 •
The Lion King
• 7
2018 ECONOMIC OUTLOOK
Inflation, which peaked at 18.6% in
February 2017 has eased for nine con-
secutive months in Nigeria. Ghana’s
inflationary pressure has eased, with
the headline rate printing at 11.7% in
November 2017 and a benign outlook
of returning to single digit in 2018. In
far South Zambia, headline inflation is
now in low single digit of 6.6% and may
ease further, as political dust settles
and economic diversification gains
stronger momentum. Local currencies
are now relatively stable, except that
concerns on potential foreign rever-
sals, political risk and commodity price
volatility remain downside risks.
Thus, it is a new beginning for Africa, as
positive consensus outlook reinforce
our view that Africa is the next fron-
tier, irrespective of the odds! With the
government in Ghana putting scarce
resources to work through growth-ori-
ented projects and fiscal reforms, we
are once again bullish on this country
as we foresee GDP growth rising to 9%
in 2018. Notwithstanding fiscal con-
solidation, increasing private sector
investment and stronger credit growth
should support economic momen-
tum. Whilst Nigeria’s GDP recovery has
been solely sponsored by oil sector
growth, thanks to higher oil price and
increased production, positive read-
ings on the Purchasing Managers’
Index (PMI) reinforce the growth pro-
spective of the non-oil sector of the
economy. Interestingly, unlike 2017
when infrastructure spending was rel-
atively weak due to delayed budget
passage and funding constraint, the
government’s agenda for 2018 infra-
structure spending seems relatively
rationale, with clear funding sources.
In the East Africa, the impact of
drought is easing, with impressive
recovery of the agricultural sector.
Even so, prolonged electoral squab-
ble has dampened business and
consumer confidence in Kenya, the
government is focused on revitalizing
growth. Good enough, the “damage”
was moderate and thus recovery
should be fast. We are constructive
on Uganda, as reforms, credit growth
and fiscal spending continue to spur
GDP growth to new-highs. A number
of landmark projects will either be
concluded or take-off this year, put-
ting Uganda on a sustainable growth
path. However, risks emanating from
politics, especially as regards the suc-
cession planning of the President, may
mar the positive outlook. There are
speculations that the President may
have lobbied the Parliament, which
scrapped the age limit for Presidential
candidates, to allow him context in
the next election due 2021.
as economies like Burkina Faso, Cote
D’Ivoire and Benin Republic revved
on stronger price of Cotton – some
13% year-on-year rise to USD79 per
tonne. Interestingly, Gold furthered
gains, rising 15% year-on-year to a
new high of USD1,310 per ounce. It
was a good year for the economies
of Burkina Faso, Cote D’Ivoire, Ghana,
Guinea and Tanzania, which all export
gold. Even as Cocoa and Coffee
prices remained subdued, the impact
was moderated by strong domestic
demand in vulnerable countries such
as Ghana, Kenya and Uganda.
Consumer good prices, measured
by headline inflation, which went off
the roof in 2016 and early part of
2017 are gradually declining. Like it
is being pulled by the forces of grav-
ity, headline inflation is fast declining.
From West to East Africa and in fact
to the far South in Mozambique and
Zambia, headline inflation is easing,
with a benign outlook in the New Year.
