Africa’s Top Oil Producers To See Robust Economic Growth

Africa's Top Oil Producers To See Robust Economic Growth
Many Africans still live in poverty despite having huge amounts of natural and human resources

AFRICANGLOBE – Oil-rich African countries will benefit from robust economic growth but weaker crude prices could send budget deficits higher next year, a Reuters poll showed on Tuesday.

The survey shows GDP in Nigeria, Africa’s top oil producer, growing a healthy 6.8 percent in 2014 while Ghana, a rising crude producer, will see even better growth of 7.5 percent – despite an unfavourable outlook for oil prices.

Angola, Africa’s second biggest producer of oil, is expected to grow 6.5 percent next year.

The predictions compare with forecasts for just 2.8 percent in South Africa, the continent’s biggest economy.

Analysts remain wary about oil revenues and another Reuters poll showed analysts see crude, currently trading around $111 a barrel, averaging only $105.40 in 2014 and $103.90 in 2015.

Adding to worries, Nigeria has delayed a budget that was supposed to be tabled last week and forecasts show a median deficit of 2.7 percent of gross domestic product in 2014.

That is considerably wider than laid out in Abuja’s September fiscal plan that said the deficit would be 1.9 percent of GDP in 2014, up from 1.85 percent this year and a previous pledge of 1.4 percent.

Ghana expects its fiscal deficit to end this year at 10.2 percent of GDP, missing a budget target of 8 percent, and economists polled see it narrowing only to 8.4 percent in 2014.

“The (Ghana) government is not doing nearly enough to rein in spending, specifically on wages,” said Melissa Verreynne at NKC Independent Economists.

For Angola the poll forecast a smaller deficit of 1.2 percent of GDP compared to the government’s 5 percent as analysts factored in a higher oil price than Accra.

“Our fiscal budget balance forecast differs significantly from government figures due to differences in our outlook for oil prices,” said Jacques Nel at NKC Independent Economists.

Angola’s government is spending heavily on infrastructure to help diversify an economy which depends on oil output for over 95 percent of its export income.

Nigeria, the continent’s second biggest economy, has held monetary policy stable for two years but the poll shows interest rates will probably rise by 50 basis points to a new high of 12.5 percent next year.

“Low inflation means Nigeria has breathing room for the time being, but we think that continued loose fiscal policy is likely to prompt rate hikes in the second half of next year,” said Shilan Shah at Capital Economics in London.

Nigerian consumer inflation fell to a fresh 5-year low of 7.8 percent in October, but the poll suggests it will average 8.8 percent next year and 10.1 percent in 2015.