Sub-Saharan Africa’s growth forecast loses ‘steam’
Nigeria’s growth rebounds, South Africa, Ethiopia to lead others
The Sub-Saharan African economy would retain its growth expectations, but not at the pace earlier forecast by the World Bank Group in April.According to its latest report- Africa Pulse, the sub-region would rather be recovering at a modest pace, and is projected to pick up to 2.4% by the end of 2017, from 1.3% recorded in 2016, against earlier forecast of 2.6 per cent.
The bi-annual analysis of the state of African economies conducted by the World Bank, however, said the moderate pace would be led by Africa’s largest economies, including Nigeria, South Africa, Ethiopia, Senegal, and a host of others.
The growth projections is coming on the heels of observed improving global financial system that the International Monetary Fund (IMF), has described as paradox, due to hidden risks associated with non-performing loans, huge debts and fears of poor implementation of borrowed funds by low income countries, including African governments.
As Nigeria pulled out of a five-quarter recession, while South Africa emerged from two consecutive quarters of negative growth, improving global conditions like rising energy and metals prices, and increased capital inflows, have helped support the regional growth recovery.Of concern too is not only that the pace of the recovery remains sluggish, but will be insufficient to lift per capita income of the masses in major economies of the sub-Saharan Africa in 2017.
In non-resource intensive countries such as Ethiopia, and Senegal, growth remains broadly stable supported by infrastructure investments and increased crop production, while metal exporting countries would gain from increased output and investment in the mining sector amid rising metals prices.
The headline inflation, according to the report would slow across the region in 2017 amid stable exchange rates, and slowing food price inflation due to higher food production.Also, while fiscal deficits would narrow, it would continue to be high with adjustment measures remaining partial and government debt remaining elevated, while additional efforts will be needed to address revenue shortfalls, and contain spending to improve fiscal balances.
World Bank’s Chief Economist for Africa, Albert Zeufack, 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.”Looking ahead in 2018, the same moderate pace will be seen in economic activity, leading to 3.2% growth, and 3.5% in 2019, as commodity prices firm, and domestic demand gradually gains ground.
The economic expansion in West African Economic and Monetary Union (WAEMU) countries is expected to continue at a strong pace on the back of solid public investment growth led by Côte d’Ivoire, Senegal and Tanzania.
Consequently, “The outlook for the region remains challenging, as economic growth remains well below the pre-crisis average. 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,” World Bank Lead Economist and lead author of the report, Punam Chuhan-Pole, said.
Again, transparency and faithful implementation of public policy was reiterated, as the failure would falter the expected growth projections.The report suggested that the inefficiency of investment, which reflects insufficient skills and other capabilities for the adoption of new technologies, distortive policies, and resource misallocation, among other things, must be reduced if countries are to capture fully the benefits of higher investment.
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