World Bank Projects Downward Revision in Economic Outlook for Sub-Saharan Africa and Ghana

The World Bank has cautioned that the economic growth outlook for Sub-Saharan Africa (SSA)—including Ghana—is facing mounting downside risks, driven largely by global trade uncertainties, political instability, and debt vulnerabilities.

In its June 2024 Global Economic Prospects report, the World Bank emphasized that while the direct impact of rising U.S. trade barriers on SSA economies remains limited due to the region’s minimal manufacturing exports to the United States, the broader implications of increasing global trade fragmentation could be significant.

If trade tensions were to escalate further or trigger a broader global economic slowdown, SSA economies—many of which depend heavily on commodity exports—could suffer considerable setbacks. The Bank highlighted that any unexpected deceleration in China’s economic growth, in particular, would reduce demand for minerals and metals, which form the export backbone for many countries in the region. Lower commodity prices would not only weaken export revenues but also restrict already strained fiscal resources, impacting economic activity and development programs.

“Indeed, a sharper-than-anticipated economic downturn in China could diminish demand for key commodities, driving prices lower and tightening fiscal space across resource-dependent SSA nations,” the World Bank warned.

Conversely, if global trade frictions ease, the growth outlook for the region could improve substantially. The Bank pointed to potential benefits from reduced tariffs, increased global demand for exports, a more predictable investment environment, and a stronger appetite among global investors for emerging markets.

Rising Political Instability Adds to Economic Risks

The World Bank also identified increased political instability and armed conflicts in parts of SSA—particularly in East Africa and the Sahel—as a major concern. It noted that prolonged or worsening violence could disrupt regional food supply chains and increase transport costs, thereby driving up food prices and contributing to inflation.

In particular, the ongoing conflict in Sudan was highlighted as a potential flashpoint, with the risk of spillover effects threatening stability and food security in neighboring regions.

Debt Sustainability Under Pressure

In addition to external trade and political concerns, the report underscored the growing debt-related pressures facing many SSA economies. If global or regional interest rates decline more slowly than anticipated, countries already struggling with high borrowing costs could find themselves in deeper fiscal distress.

The World Bank noted that many nations in SSA are grappling with elevated debt servicing burdens, especially on non-concessional loans. A reduction in global investor risk appetite could make refinancing existing debt more expensive, potentially reversing gains made in fiscal consolidation.

“Persistently high interest rates and tighter global financial conditions are already complicating debt management for several countries,” the report stated. “Further increases in borrowing costs could push some governments closer to the brink of debt distress.”

Implications for Ghana and the Broader Region

For countries like Ghana, which are working to stabilize their economies amid fiscal consolidation efforts, the warnings from the World Bank come at a critical juncture. Ghana’s economic recovery remains vulnerable to external shocks such as volatile commodity prices, changes in investor confidence, and global interest rate trends.

The report concludes that maintaining stability in SSA will require a combination of sound domestic policies, continued efforts toward debt sustainability, and a favorable global economic environment. Greater coordination among regional governments and international development partners will also be essential to weather potential shocks and sustain long-term growth.

The World Bank’s assessment underscores the importance of preparedness and policy agility in navigating what remains a highly uncertain global economic landscape.