Growth in sub-Saharan Africa will be stronger this year with the rebound led by the region’s largest economies, the World Bank said on Wednesday.
The region will grow at 2.4% in 2017 from 1.3% last year, according to the Bank’s bi-annual analysis of the state of African economies, although that is slightly weaker than the 2.6% forecast in April. Nigeria, which moved out of recession in the second quarter of this year, Angola, and South Africa’s positive GDP growth in the three months to June after two successive quarters of negative growth will lead the region’s recovery, the report said.
In addition, the update noted that economic activity in metals exporters has picked up due to an increase in mining output and improvement in the agriculture sector. In non-resource intensive countries like Uganda and most of her neighbours, GDP growth is stable and supported by domestic demand, which is driven by lower inflation and a more accommodative monetary policy in some economies.
But the region’s recovery is still weak, the update pointed out. “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.
The Bank said external conditions are more favourable to the region’s growth prospects. Global growth is seen improving, while there has been an increase in the global goods trade. Rising energy and metal prices and supportive global financing conditions will also favour the region, it said.
Growth is projected to rise to 3.2% in 2018 and 3.5% in 2019 on the assumption that commodity prices will stay up and domestic demand rise further, driven by lower inflation and expansionary monetary policy. The forecast also hopes for “gradually improving conditions in the large economies as they implement measures to address economic imbalances.”
However, the risks to this outlook skew to the downside in the medium term. They include lower global commodity prices, a faster-than-expected normalization of monetary policy in the United States, delays in implementing policies aimed at addressing economic instabilities, political uncertainty, and inadequate rainfall.