The Russian invasion of Ukraine will have a significant effect on the Gross Domestic Product (GDP) of countries in Sub-Saharan Africa (SSA), including Nigeria’s, a Fitch Solutions report has stated.
However, the report stated that the downward growth revisions will be partly offset by economies of some Sub-Saharan African countries on expectations of stronger growth in the region’s oil exporters.
“We now forecast real GDP growth in SSA of 3.4 per cent in 2022, down from 3.8 per cent projection at the beginning of the year.
“However, our downward growth are partly offset by expectations of stronger growth in the region’s oil exporters. We have revised up our growth projection for Nigeria from 3.0 per cent to 3.2 per cent, with an expected decline in domestic output capping expansion,” it noted.
Compared to other emerging markets, the report said that Sub-Saharan Africa exports very little to Russia and Ukraine, stressing therefore that the conflict would have limited impact on trade.
But Fitch stated that Nigeria and Angola are most exposed to wheat price rises as inflationary pressures build, adding that rising grain and energy prices will have a particularly strong inflationary impact on some countries in Africa.
“In SSA, food and transport can account for as much as 75 per cent of the consumer price index,” the report noted.
It listed Malawi and Guinea, two very small markets as the only countries to send more that 2 per cent exports to the two warring countries, but stressed that Russia remains a larger source of the continent’s grains supply.
“However, Russian production is unlikely to be significantly affected by the conflict, and export restrictions in retaliation to Western sanctions Russia and Ukraine are unlikely to target SSA,” Fitch projected.
It pointed out that rising grain and energy prices will have a particularly strong inflationary impact in SSA couAfrica and outstrip supply, especially in Angola, Nigeria and Kenya.
“Grain demand in the region has risen sharply in recent years, and far outstrips supply, especially in Nigeria, Angola and Kenya. We have revised up our 2022 inflation forecasts for South Africa, Ethiopia, Ghana, Mozambique, Namibia and Sudan
“While a few SSA economies, notably Nigeria, Angola, Congo-Brazzaville, Gabon and South Sudan are net oil exporters, most SSA economies are net oil importers of oil.
“With import bills set to rise, we have revised our forecasts to signal wider current account deficits for big net oil importers,” the report added.