13 July 2018 ( Lagos ) :Sub-Saharan Africa’s (SSA) economy growth story was kept afloat by higher commodity prices, favorable weather condition, stable external environment and pass-through from global growth. Despite weak growth from power-constituents – Nigeria and South Africa, robust activities in other smaller divisions drove SSA’s growth higher by 2.2% YoY in Q1 2018 (Q1 17: 1.0%), according to the IMF. Notably, positive performance was particularly evident in economies such as Angola, Ghana, and Kenya.

In terms of the drags, South Africa’s growth picture remained fragile as Q1 18 GDP of 0.8% YoY underperformed (Q4 17: 1.5% YoY and Q1 17: 1.1% YoY) weighed by declines in manufacturing (-0.8%), construction (-0.2%) and Electricity, Gas, and Water (-1.4%) sectors which offset the growth seen in agriculture and mining sectors of 6.9% apiece. For Nigeria, it was a case of slow but steady recovery1. Specifically, Q1 18 GDP (+1.95% YoY) was an oil-led growth (+14.8% YoY)2 as non-oil GDP (+0.8% YoY) remained largely subdued on the back of contraction in trade and construction GDP even as service GDP3 exited recession. 

However, the impact of higher oil production and favorable weather condition largely propelled growth in Ghana and Kenya. To the former, Q1 18 GDP growth of 6.8% YoY (Q1 17: 6.7%) is reflective of the expansion in oil & gas production, while growth in Kenya (5.7% YoY) was driven by the agriculture sector (+5.2% YoY vs. Q1 17: 1.0% YoY), following favorable weather conditions. On balance, whilst the region’s heavyweights have significantly dragged growth, cheery activities across other smaller constituents largely kept recovery story intact.

Reporting for EasyKobo on Friday, 13 July 2018 in Lagos, Nigeria

Source: ARM Securities Limited

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