Smaller economies among Portuguese-speaking African countries grow above the regional average in 2018

São Tomé and Príncipe, Guinea Bissau and Cabo Verde (Cape Verde), the three smallest Portuguese-speaking African economies, are expected to see economic growth in 2018 well above the average for the sub-Saharan Africa region, according to the latest forecast from the International Monetary Fund (IMF).

Projections are particularly favourable for São Tomé and Príncipe, which will see its economic growth accelerate to 5% this year, up from 4% last year, gaining even more momentum in 2019, rising to 5.5%.

In the case of Guinea-Bissau, this year and in 2019 the country is expected to keep the same pace of economic growth recorded in 2017 – 5.5%.

With regional economic growth increasing to 3.4% this year and 3.7% in the next, Cabo Verde accelerates this year to 4.3% growth but is expected to slow to 4% next year.

The two largest Portuguese-speaking African economies will see below average growth this year and next, with Mozambique slowing to 3% this year and 2.5% in the next, which is a downward review of previous IMF forecasts. However, the Mozambican economy presents the most encouraging prospects for the medium term – 9.9% growth in 2023, a year in which the country’s natural gas exploration is expected to begin.

Angola is expected to record the lowest growth among Portuguese-speaking African countries in 2018 and 2019 – 2.2% and 2.4%, respectively, according to the upward review of IMF forecasts. For 2023, the forecast is more encouraging, 4.9%, which is above the regional average.

Angola’s economic growth forecasts by the Economist Intelligence Unit (EIU) are less generous than those of the IMF, projecting a rate of just 1.7% this year.

In Africa’s Pulse report, a six-month review of the state of African economies conducted by the World Bank, also released last week, Angola is singled out along with Nigeria and South Africa, as examples of “gradual recovery of growth” in the biggest economies.

“For many African countries, economic recovery is vulnerable to price fluctuations and the production of raw materials,” said Punam Chuhan-Pole, the World Bank’s chief economist and author of the report, stressing the need for “diversification strategies” at a governmental level.

Overall, the World Bank considers that the recovery in sub-Saharan Africa is not fast enough, with growth levels still far below pre-crisis levels and it is urgent to accelerate and extend macroeconomic and structural reforms “to achieve high and sustained growth levels.”

The report also points to an increase in public debt in relation to Gross Domestic Product in the region and a change in debt composition, “since countries have moved away from traditional sources of financing on preferential terms to other market-based ones.” (macauhub)