Economy defies regions weak growth, post solid performance-report

In Summary

• Slower-than-expected overall growth reflects ongoing global uncertainty 

• The growth currently at 6.1 per cent is expected to grow to 6.3 per cent by the end of this year

IMPRESSED: World Bank headquarters
IMPRESSED: World Bank headquarters

Growth in Sub-Saharan Africa has been downgraded to 2.3 percent for 2018, down from 2.5 percent in 2017, the latest survey by World Bank shows.

This is the fourth consecutive year that the economic growth has remained below the population growth according to the April 2019 issue of Africa’s Pulse.

While the growth is expected to rebound to 2.8 percent in 2019, it will have remained below three percent since 2015.

Despite the poor performance in the region, Kenya recorded a solid economic growth within the review period, the report notes.

Released yesterday, the survey attributes the growth to favourable weather conditions that boosted agriculture and electricity production, and pro-business reform.

The growth currently at 6.1 per cent is expected to grow to 6.3 per cent by the end of this year according to a forecast by President Uhuru Kenyatta.

“In 2019, we expect an even stronger growth of 6.3 percent, reflecting continued improvement in the business environment, momentum associated with execution of the Big Four Agenda, and sustained macroeconomic stability,” Kenyatta said during his State of the Nation adress last week. 

Like Kenyatta, World Bank Chief Economist for Africa Albert Zeufack predicted that the growth is likely to grow in excess of six per cent on boosted agriculture production.

According to the survey, the slower-than-expected overall growth reflects ongoing global uncertainty but increasingly comes from domestic macroeconomic instability including poorly managed debt.

Also attributed to the poor performance is fragility in inflation, and deficits; political and regulatory uncertainty; and poor climate conditions.

Africa’s Pulse found that the fragility is costing sub-Saharan Africa over half a percentage point of growth per year.

This adds up to 2.6 percentage points over 5 years. Zeufack noted that digital transformation can play a bigger role in boosting the GDP growth and in eradicating poverty.

“The digital transformation can increase growth by nearly two percentage points per year and reduce poverty by nearly one percentage point per year in sub-Saharan Africa alone. This is a game-changer for Africa,” He said.

In other large economies such as Nigeria, growth reached 1.9 percent in 2018, up from 0.8 percent in 2017, reflecting a modest pick-up in the non-oil economy.

South Africa came out of recession in the third quarter of 2018, but growth was subdued at 0.8 percent over the year, as policy uncertainty held back investment.

Angola, the region’s third-largest economy, remained in recession, with growth falling sharply as oil production stayed weak.

Growth picked up in some resource-intensive-countries like the Democratic Republic of Congo and Niger, as stronger mining production and commodity prices boosted activity alongside a rebound in agricultural production and public investment in infrastructure.

In others, like Liberia and Zambia, growth was subdued, as high inflation and elevated debt levels continued to weigh on investor sentiment.