Economic growth in sub-Saharan Africa is seen recovering at a modest pace, and is projected to pick up to 2.4 percent in 2017 from 1.3 percent in 2016, according to the new Africa’s Pulse, a bi-annual analysis of the state of African economies conducted by the World Bank. This is below the April forecast of 2.6 percent.
Looking ahead, the report indicated that growth across the region is projected to see a moderate increase in economic activity, with growth rising to 3.2% in 2018 and 3.5% in 2019 as commodity prices firm and domestic demand gradually gains ground, helped by slowing inflation and monetary policy easing.
The rebound, according to the World Bank would be led by the region’s largest economies, Nigeria and South Africa, both of which pulled out of recession in the last quarter.
He however noted that the two countries need “deeper reforms” to get back to pre-2014 levels of growth and their political uncertainty needs to be reined in. He said they make up about half of sub-Saharan Africa’s GDP growth
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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.
But the report warns that the pace of the recovery remains sluggish and will be insufficient to lift per capita income in 2017.
“Regional per capita output growth is forecast to be negative for the second consecutive year, while investment growth remains low, and productivity growth is falling,” it said.
“The outlook for the region remains challenging as economic growth remains well below the pre-crisis average,” says Punam Chuhan-Pole, World Bank lead economist and lead author of the report.
“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.”
However, the growth prospects are seen remaining weak in the Central African Economic and Monetary Community (CEMAC) countries as they struggle to adjust to low oil prices.
On the other hand, 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 recovery 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.
Frontpage February 7, 2018