In January 2016, oil prices fell to their lowest levels in more than a decade. Meanwhile, China, the world’s second-largest economy, is experiencing its most sluggish growth in a quarter-century—dragging down commodity prices and dampening the global economic outlook. The effects of this broad slowdown will hurt African economies more than most, because China and other emerging markets are not only primary consumers of African commodities, but also are the primary source of financing for the major infrastructure and other development projects that are essential to Africa’s future growth.
Its release coinciding with the 2016 Spring Meetings of the International Monetary Fund and the World Bank Group, a new issue brief, “Embracing Impact: How Africa Can Overcome the Emerging Market Downturn,” by Africa Center Director J. Peter Pham and Senior Fellow Aubrey Hruby explores this new phenomenon, offering recommendations to African governments and US policymakers on the way forward.
The news is not all bad. The fundamentals behind Africa’s growth—a young, urbanizing population, increasing economic diversification, and growing discretionary spending—have not changed, and they continue to justify optimism about the continent’s long-term prospects. The International Monetary Fund, for example, predicts that growth will rebound in Africa by the end of the year.
The current downturn might even incentivize much-needed reforms, the elimination of widespread inefficiencies, and investment in productivity increases—unlocking latent growth in the process. Whether African nations seize this opportunity, or merely look for a short-term fix through outside donor support, will depend on strength of leadership and the capacity to implement new policy.
Growth projections, and degrees optimism, vary greatly across a complex continent. But it is possible to make some generalizations about which countries will emerge unscathed—or even, better off—after the emerging market downturn passes, and which countries must act quickly and decisively to alter their negative economic course.
This report is part of a partnership between the Atlantic Council’s Africa Center and the OCP Policy Center and is made possible by generous support through the OCP Foundation.