World Bank projects modest 2.4% economic growth for sub-Saharan Africa
The Bank forecast a 2.6 per cent growth in its bi-annual economic report, the Africa’s Pulse in April.
In a news release announcing the new figures in the Africa’s Pulse, the Bank said, this rebound is led by the region’s largest economies.
“In the second quarter of this year, Nigeria pulled out of a five-quarter recession and South Africa emerged from two consecutive quarters of negative growth. Improving global conditions, including rising energy and metals prices and increased capital inflows, have helped support the recovery in regional growth,” the Bank said.
The pace of the recovery, however, remains sluggish and will be insufficient to lift per capita income in 2017, the report warned.
According to the report, growth continues to be multispeed across the region. In non-resource intensive countries such as Ethiopia and Senegal, growth remains broadly stable supported by infrastructure investments and increased crop production. In metal exporting countries, an increase in output and investment in the mining sector amid rising metals prices has enabled a rebound in activity.
“Headline inflation slowed across the region in 2017 amid stable exchange rates and slowing food price inflation due to higher food production. Fiscal deficits have narrowed, but continue to be high, as fiscal adjustment measures remain partial. As a result, government debt remains elevated. Across the region, additional efforts are needed to address revenue shortfalls and contain spending to improve fiscal balances,” it added.
Commenting on the report, Albert Zeufack, World Bank Chief Economist for Africa, said, “Most countries do not have significant wiggle room when it comes to having enough fiscal space to cope with economic volatility. It is imperative that countries adopt appropriate fiscal policies and structural measures now to strengthen economic resilience, boost productivity, increase investment, and promote economic diversification.”
The report further indicates that looking ahead, sub-Saharan Africa is projected to see a moderate increase in economic activity, with growth rising to 3.2 per cent in 2018 and 3.5 per cent in 2019 as commodity prices firm and domestic demand gradually gains ground, helped by slowing inflation and monetary policy easing.
However, it points out that growth prospects will remain weak in the Central African Economic and Monetary Community (CEMAC) countries as they struggle to adjust to low oil prices.
The economic expansion in West African Economic and Monetary Union (WAEMU) countries is expected to proceed at a strong pace on the back of solid public investment growth, led by Côte d’Ivoire and Senegal. Elsewhere, growth is projected to firm in Tanzania on a rebound in investment growth and recover in Kenya, as inflation eases. Ethiopia is likely to remain the fastest-growing economy in the region, although public investment is expected to slow down, it said.
“The outlook for the region remains challenging as economic growth remains well below the pre-crisis average. Moreover, the moderate pace of growth will only yield slow gains in per capita income that will not be enough to harness broad-based prosperity and accelerate poverty reduction,” says Punam Chuhan-Pole, World Bank Lead Economist and lead author of the report.
By Emmanuel K. Dogbevi