World Bank predicts 2.4 per cent growth for SSA

Albert Zeufack

Albert Zeufack

Economic growth in Sub-Saharan Africa (SSA) is recovering at a modest pace, and is projected to pick up to 2.4 per cent in 2017 from 1.3per cent in 2016, the World Bank has said in its new Africa’s Pulse Report.

The new projected growth for SSA is below the April forecast of 2.6 per cent.

The Africa’s Pulse is a bi-annual analysis of the state of African economies conducted by the World Bank.

Speaking at the launch of the 16th Africa’s Pulse, which highlighted on skills development via teleconference, the World Bank Chief Economist for Africa, Albert Zeufack said the rebound in growth was influenced by the two largest economies, Nigeria and South Africa.

“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,” he said.

Dr Zeufack also said the “improving global conditions, including rising energy and metal prices and increased capital inflows, have helped support the recovery in regional growth”.

However, the Chief Economist warned that the pace of recovery remained sluggish and would be insufficient to lift per capita income in 2017.

He said growth accelerated across the region, in non-resource intensive countries such as Ethiopia and Senegal, growth remained broadly stable supported by infrastructure investments and increased crop production, adding that in metal exporting countries, an increase in output and investment in the mining sector amid rising metals prices, had enabled a rebound in economic activities.

Dr Zeufack said headline inflation slowed across the region in 2017 amid stable exchange rates and lowing food price inflation due to higher food production, indicating that fiscal deficits had narrowed, but continue to be high, as fiscal adjustments measures remain partial, influencing high government debts.

“Most countries do not have significant wiggle room when it comes to having enough fiscal space to cope with economic activity.  It is imperative that countries adopt appropriate fiscal policies and structural measures not to strengthen economic resilience, boost productivity, increase investment, and promote economic diversification,” he said.

Touching on the growth outlook for the SSA in the next two years, he said the region was projected to see a moderate increase in economic activity, with growth rising to 3.2 per cent 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.

Growth in Central African Economic and Monetary Community countries, Dr Zeufack indicated would remain weak as they struggle to adjust to low oil prices and economic expansion in West African Economic and Monetary Union countries was expected to proceed at a strong pace on the back of solid public investment growth.

Among other, suggestions, Dr Zeufack called for measures to increase domestic revenue mobilisation and address revenue shortfalls, and contain spending to improve fiscal balances.

The Economist for Africa also said countries in SSA must diversify their economies and increase investment in skills training.

Punam Chuhan-Pole, World Bank Lead Economist and Lead Author of the Africa’s Pulse said “the outlook for the region remains challenging as economic growth remains well below the pre-crisis average”.

She said the moderate pace of growth would only yield slow gains in per capita income and that would not be enough to harness broad-based prosperity and accelerate poverty reduction.

 

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