The growth of South African and Nigerian economies will continue to slow down as that of other countries in the rest of the region will pick, with Ethiopia’s growth expected to be on a staggering 10.2%, according to the latest World Bank Global Economic Prospects 2016.
According to the report released on Thursday, South Africa is forecast to grow by 1.4% in 2016- one of the weakest in Africa. This growth is just 0.1% up from last year’s 1.3 %.
In spite of these dissimilar growths in the region, the World Bank says that sub-Saharan Africa as a whole, is expected grow by 4.2 % in 2016 from 3.4 % posted last year, as commodity prices stabilize and supply constraints ease.
Oil, political strife and ebola crisis contributed to slow growth
However, the “Economic activity in Sub-Saharan Africa (SSA) decelerated from 4.6 percent in 2014 to 3.4 percent in 2015, the weakest performance since 2009, due to a combination of external shocks and domestic constraints,” the report indicates adding that the slowdown was most pronounced among oil exporters such as Nigeria.
Ebola crisis further weakened economic activity in some countries like Guinea and Sierra Leone. In Burundi and South Sudan, the activity weakened due to political instability and civil strife experienced in the past year.
Low-income countries experience robust growth
“Countries, including low-income ones and some fragile states—Côte d’Ivoire, Rwanda, and Tanzania—growth remained robust, reflecting lower exposure to the commodity slowdown, and tailwinds from large-scale infrastructure investment.”
In Kenya, despite the fact that the shilling is losing against the dollar, the country is expected to grow at a robust pace reinforced by largescale infrastructure projects, including the ongoing construction of Standard Gauge Railway, which will in turn boost domestic trade. The new port at Mombasa is also expected to contribute positively to the growth of country’s economy over time.
Heavy investment in energy and transport infrastructure by governments in low-income, non-oil commodity exporters will help improve the operational environment growth.
“Although debt levels may rise, they remain manageable in most low-income countries as growth has been robust” the report reads.
In 2016, according to the report weak expansion among major emerging markets will weigh on global growth, but economic activity should still pick up modestly to 2.9 per cent from 2.4 per cent in 2015.
“Simultaneous weakness in most major emerging markets is a concern for achieving the goals of poverty reduction and shared prosperity because those countries have been powerful contributors to global growth for the past decade,” the report says.
Moreover, a lack of growth in developing countries “poses a threat to hard-won gains in raising people out of poverty,” the report warns.
World Bank Group Vice President and Chief Economist Kaushik Basu advised that “a combination of fiscal and central bank policies can be helpful in mitigating these risks and supporting growth,” can help mitigate the risks associated with the possibility of a disorderly slowdown in a major emerging economy.