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East Africa growth positive despite worst sub-Saharan performance

Tuesday October 25 2016
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Economic growth in sub-Saharan Africa has decelerated sharply to its weakest in nearly two decades, hurt by a slump in commodity prices, IMF says. TEA GRAPHIC

Significant drop in the oil import bills emanating from sharp decline of global crude prices has helped East Africa countries sustain positive economic growth in 2016.

The International Monetary Fund (IMF), in a new report, contends that despite economic growth in sub-Sahara Africa set to slow to its lowest level of 1.4 per cent this year compared to 3.4 per cent in 2015, East African nations are projected to record positive growth.

The Regional Economic Outlook report dubbed Sub-Sahara Africa, Multispeed Growth, shows that Kenya, Tanzania, Rwanda and Ethiopia are among countries expected to continue to grow at more than six per cent in 2016 largely because of lower oil import prices, an improved business environment and strong infrastructure investment.

However, countries whose economies are largely dependent on commodities like Nigeria, Angola and South Africa are anticipated to post depressed growth of 1.3 per cent this year.

“Against the drop of lower commodity prices and a less-supportive global environment, economic activity in sub-Saharan Africa has decelerated sharply,” said Abebe Aemro Selassie, IMF Director for African Department.

He added that the projected gross domestic product growth of 1.4 per cent in 2016 is the worst performance yet in more than 20 years.

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The report shows that the crash in commodity prices has given rise to two contrasting pictures of sub-Sahara Africa; in one camp comprises of 23 commodity-exporting countries which are under severe economic strains and are depressing the overall growth in the region.

On the other camp are 22 countries which continue to sustain reasonably high growth due to their diversified economies.

The broad-based East Africa countries have in the recent past discovered significant quantities of oil, gas and other commodities, but extraction is yet to commence.

According to Kenya’s National Treasury minister Henry Rotich, the country will learn from experiences of the commodity exporters when it embarks on full scale crude exportation to avoid suffering the same fate.

“We are not likely to suffer the oil curse problem because we are starting with a much more diversified economy,” he said in Nairobi at the launch of the IMF report.
Despite the slowdown in growth, IMF expects economic growth in sub-Sahara Africa to rebound in 2017 at a rate of 3 per cent and 4.5 per cent in 2018.

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