Africa’s second-largest economy has contracted for the past three months in a row.
Challenges facing the economy include power shortages, low global demand, falling commodity prices and the looming threat of inflation which is forecasted to surpass the 3 percent into 6 percent range causing lowered economic growth forecasts.
The U.S. recently announced that it will undertake review of South Africa’s eligibility for trade benefits under the African Growth and Opportunity Act (AGOA). Eliminating barriers to U.S. trade and investment is one of the criteria for membership of AGOA, which provides duty-free access to goods from sub-Saharan African countries, ranging from crude oil to clothing. South Africa has had a ban on U.S. poultry imports since last December due to an outbreak of bird flu. This ban came on top of 15 years of punishing import duties on some U.S. chicken products. Cutting access to AGOA could see South Africa lose as much as $1.7 billion of exports a year.
A recent survey by the Pew Research Center found that people in major sub-Saharan African nations were feeling more optimistic about their economic prospects than many others around the world.
The region was relatively unscathed by the global financial crisis, producing some of the fastest-growing economies in the world. In 2015, the International Monetary Fund projects sub-Saharan Africa will see growth of about 4.5 percent , not as high as in some previous. years but a figure that would be the envy of many Western countries, including the U.S.
What does this mean for Florida?
Seven of the world’s ten fastest growing economies are in Africa. North Africa expects a four to seven percent GDP growth by 2020, while Sub-Saharan Africa expects a six to seven percent growth. Experts project a population boom so large that by 2100, 40 percent of the world’s population will be African. The middle class is expected to triple from 150 million people in 2010 to 490 million in 2040. Africa’s workforce is projected to be 1 billion by 2040, the largest in the world. Nigeria overtook South Africa as the continent’s biggest economy last year, but South Africa remains the region’s richest, while Morocco is positioning itself to be the business “gateway” for the continent.
While Africa has great potential for growth with increased urbanization and rising incomes, challenges still arise for this emerging region.