TANZANIA and East African countries are set to gain through increased trade and global financing as sub-Saharan Africa is projected to record modest growth recovery this year.
The World Bank Lead Economist and lead author of Africa’s Pulse, a bi-annual analysis of the state of African economies, Ms Punam Chuhan-Pole, said strong growth would offer prospects for increased trade and investments through more opportunities for exports and global financing.
“Strong global growth will offer more opportunities for trade and investments... provides more alternatives for global financing where investors will look for more opportunities for financing,” she said in a video conference from Washington during presentation of the report which projected Sub-Saharan Africa would record modest economic growth recovery of 2.4 per cent in 2017 after the region grew by just 1.3 per cent in 2016.
East Africa posted strong economic growth last year helping Africa to retain its position as the second-fastest growing continent globally despite a dismal growth. According to African Development Bank (AfDB), much of Africa’s growth in 2016 was driven by East Africa where sev eral countries recorded strong performances.
Tanzania recorded 7.0 per cent growth, Kenya 5.8 per cent, and Rwanda and Uganda 5.9 per cent. And according to Global Economic Prospect report released recently, East Africa is projected to continue with robust economic growth where Ethiopia is forecast to expand by 8.3 per cent and Tanzania by 7.2 per cent.
In its new Africa’s Pulse, a bi-annual analysis of the state of African economies, the World Bank however warns that the pace of the recovery remains sluggish and will be insufficient to lift per capita income in this year.
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,” said Zeufack via a video conference from Washington DC.
The World Bank said the economic 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.
The Pulse says improving global conditions, including rising energy and metals prices and increased capital inflows, have helped support the recovery in regional growth. “Growth continues to be multispeed across the region.
In non-resource intensive countries such as Ethiopia, Tanzania and Senegal, growth remains broadly stable supported by infrastructure investments and increased crop production,” says the report.
The Africa’s Pulse notes that headline inflation slowed across the region in this year amid stable exchange rates and slowing food price inflation due to higher food production. It says 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.”
The World Bank said SubSaharan 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.