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Apart from the slowing down and rebalancing of the Chinese economy, and a steady
growth in the Indian economy, Russia and Brazil are projected to remain in recession in
2016. These countries have seen their debt levels rising sharply and subsequently their
sovereign credit ratings have been downgraded. Standard & Poor’s (S&P) and Moody’s
placed Russia below investment grade in 2015. Brazil was placed in sub-investment grade
by S&P in September 2015, followed by Fitch in December and finally Moody’s in early 2016.
Africa
In sub-Saharan Africa, lower commodity prices and higher borrowing costs will weigh
heavily on the region’s largest economies such as Nigeria, South Africa and Angola.
The outlook for sub-Saharan Africa is based on:
• a fall in commodity demand and prices;
• slowing down in China, one of the region’s biggest export markets;
• drought in a number of economies, especially in Southern Africa; and
• large fiscal and current account deficits exacerbated by depreciating currencies.
Figure 39 below shows the outlook in sub-Saharan Africa.
Figure 39 Sub-Saharan Africa Outlook, 2014 – 2017 PROVINCIAL OUTLOOK NATIONAL OUTLOOK GLOBAL OUTLOOK GAP HOUSING INVESTOR NARRATIVE SPOT THE OPPORTUNITY PORTFOLIO INSIGHTS KHULISA NEWSLETTER ELECTRIC VEHICLES ENERGY SECURITY LOOKING AT GDP
Source: IMF, SARB
A number of Southern African countries face severe drought conditions, which do not
only impact on growth and exports, but also cause domestic food prices to increase.
The inflationary pressure coupled with weakening exchange rates weighed heavily
on growth.
Commodity Prices and Outlook
Oil prices declined significantly in 2015 and are projected to record modest increases
in 2016 and 2017. The decline in oil prices is projected to impact negatively on fuel
exporters (and fuel export dependent economies) and investment in oil and gas
extraction. Crude oil prices fell from $53.9 per barrel in 2015Q1 to $34.4 per barrel
in 2016Q1.
A similar price trend – although more gradual – is also observed for coal, which fell from
$62.1 to $51.5 per metric ton during the same period.
QUARTERLY ECONOMIC BULLETIN 2016 79
