Business
Fragile but resilent, EA will post 3-5pc growth
Posted Monday, March 1 2010 at 23:57
What role has the World Bank played in mitigating the effects of the financial crisis, especially in vulnerable countries like those in East Africa?
The World Bank has called for a Crisis Response Facility to ensure quick and effective assistance to vulnerable poor countries.
In fiscal year 2009, the Bank committed nearly $60 billion to support countries hit by the global crisis, a 54 per cent increase over the previous year.
The Bank’s global crisis response initiatives focus on three priority areas: the safety net programmes to protect the most vulnerable; maintaining investments in infrastructure, and support for small and medium-size enterprises and microfinance.
These initiatives have mobilised an additional $8.3 billion to mitigate the crisis impact on poor countries.
Since the last quarter of 2009, East Africa’s economies have shown signs of recovery.
Loan defaults have gone down while commercial banks have started expanding their lending to the market.
However, the recovery in growth is projected to be moderate and fragile, with output in sub-Saharan Africa expected to accelerate to below-trend growth rates of 3.8 per cent this year and 4.6 per cent in 2011.
What is likely to drive this growth?
The rebound in economic activity will primarily be fuelled by recovery in private demand, exports and investment, with the largest contribution expected to come from exports.
The overall strength of the recovery, however, will depend on growth performance in key export markets and investment partners, particularly the United States, the European Union and China.
Despite this, growth in external demand is expected to wane in the second half of 2010.
And stronger domestic demand will cause import growth to accelerate with net exports contributing negatively to overall growth.
But all is not lost. We have seen the East African Community pursuing a number of sustainable projects that are likely to attract capital flows.
Should the region go ahead with its plans for sovereign bonds?
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