Economic growth in sub-Saharan Africa will slightly pick up in 2017 following its worst decline in more than two decades in 2016, according to a World Bank report released Wednesday.
The region will grow at a projected 2.6% in 2017 compared to 1.3% last year, the report, Africa’s Pulse, says.
The rebound will be driven by rising commodity prices, particularly prices of oil and metals, strengthening external demand, and the end of drought conditions in several countries.
The report notes that seven countries whose economies depend less on resource-intensive economies – Cote d’Ivoire, Ethiopia, Kenya, Mali, Rwanda, Senegal, and Tanzania – stand out for their economic resilience, with GDP growth rates above 5.4% in 2015-2017.
South Africa, Nigeria, and Angola, the region’s largest economies, are also registering a rebound, but the recovery will be slow because of “insufficient adjustment to low commodity prices and policy uncertainty.”
GDP growth in the region will rise to 3.2% in 2018 and 3.5% in 2019 as the region’s largest economies recover, the report says. It will however stay subdued for oil exporters – due to lower oil prices – while metal exporters will experience a moderate uptick.
In February the bank said Uganda would grow at between 4.5% and 5% in 2016/17 due to shocks in the economy and external factors. “It is unlikely that there will be a dramatic acceleration in the rate of growth in the second half of the year,” the bank’s Uganda Economic Update said.
Uganda’s GDP expanded 4.8% in 2015/16.
The region’s growth is “insufficient” to raise average incomes, the report said. Average income will fall by 0.1% in 2017, before increasing by less than 1.0% in 2018 and 2019.
“With still high poverty rates, the region is faced with the urgent need to regain the momentum in growth and make it more inclusive,” says the report.
“This will require deep reforms to improve institutions for private sector growth, develop local capital markets, improve the quantity and quality of public infrastructure, enhance the efficiency of utilities, and strengthen domestic resource mobilization.”
The risks to the outlook are stronger than expected tightening of global financing conditions, a weaker improvement in commodity prices, the possibility of rising protectionism, neglect of reforms, security threats, and political uncertainty ahead of elections in some countries.