Recent trends have shown just how economic power shifted eastwards as the BRICs (Brazil, Russia, India and China) outran the rest of the world in terms of economic growth and development.
However, another striking issue is that the success story of the past decade lies elsewhere.
According to a recent analysis by The Economist, over the ten years to 2010, no fewer than six of the world’s ten fastest-growing economies where in Sub-Saharan Africa.
The only BRIC country to make the top ten was China, in second place behind oil-producing Angola.
According to IMF forecasts, Africa will grab seven of the top ten places over the next five years.
In addition, the World Bank has raised its forecast for economic growth in Sub-Saharan Africa to 5.3% in 2011 as the global economy recovers and the outlook improves for oil producers such as Nigeria and Angola.
The World Bank also estimates that growth in the world’s poorest region will pick up from an estimated 4.7% in 2010.
The main drivers of growth will be the continued recovery in the global economy and positive developments in domestic demand.
China’s demand for raw materials and higher commodity prices, big inflows of foreign direct investment, foreign aid and debt relief, urbanisation and rising incomes fuelled by faster growth in domestic demand are some of the factors contributing to the high growth rates.
The economic outlook on Africa generally has also been reflected by the positive stock market performances in 2010. Eight out of the eleven main Sub-Saharan Africa markets closed the trading year on a positive footing, with the Uganda Securities Exchange (USE) topping the list, with a 34.16% gain.
Nigeria and Kenya remain by far the most liquid markets compared to others.
In our view, the outlook for 2011 remains positive, the usual emerging market speed bumps aside, which we believe are generally priced into the markets anyway.
Article produced by the Imara Africa Securities team. Imara is an investment banking and asset management group renowned for its knowledge of African markets.