Citius, Altius, Fortius:Is Growth in Sub-Saharan Africa More Resilient?

Abstract

Sub-Saharan Africa (SSA) as a region grew at an unprecedented pace over the past two decades. This period of growth resurgence, coined as Africa Rising, witnessed many countries having an annual average GDP growth rate that exceeded 5%. This phenomenon lifted the boats of resource-rich, resource-poor and some fragile countries. It was supported partly by a very favourable external environment and an improvement of institutional and macroeconomic policy frameworks. The goal of this paper is two-fold first, we examine the resilience of SSA over the past 20 years by assessing whether the growth acceleration of 1995–2008 (relative to 1974–1994) was accompanied by improved structural and macroeconomic indicators. Second, we evaluate whether African economies have replenished liquidity and policy buffers during the post-global financial crisis (2009–14 versus 2003–08). We find that improved macroeconomic frameworks allowed some African nations to withstand the 2008–09 crisis and implement countercyclical policies. However, restricted macroeconomic policy space during the post-crisis period may limit the region's response to current external headwinds (end of commodity super cycle and normalisation of US monetary policy) and growing macroeconomic vulnerabilities (rising fiscal deficits and external imbalances).