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Slowdown in Africa’s economic pulse

Tuesday October 17 2017
Train

Passengers queue to ride Ethiopia's tramway in Addis Ababa. PHOTO FILE | NATION

By VICTOR KIPROP

The World Bank has lowered its economic growth projections for sub-Saharan Africa for this year, from the 2.6 per cent forecast it gave in April to 2.4 per cent.

In its latest Africa Pulse report, the World Bank said the downgrade was informed by factors such as failure by Nigeria to meet its growth expectations, leading to slower recovery from the sharp slowdown experienced over the past two years.

“Regional per capita output growth is forecast to be negative for the second consecutive year, while investment growth remains low and productivity growth is falling,” the report notes.

The revision marks the second debasing of sub-Saharan Africa’s growth prospects by the bank in just 10 months, having slashed its 2.9 per cent projection in January to 2.6 per cent in April.

However, at 2.4 per cent, the region will have nearly doubled its economic growth from the low of 1.3 per cent, registered in 2016, as it picks up modest recovery from the lower commodity prices-driven economic slump experienced in recent years.

The rebound is mainly driven by the region’s largest economies — South Africa and Nigeria — which are both exiting recession, the report notes.

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World Bank chief economist for Africa Albert Zeufack said the two countries make up nearly half of the region’s GDP but they need “deeper reforms” to return to the pre-2014 economic growth levels.

In East Africa, Ethiopia will remain the fastest-growing economy despite expected slowdown in public investment. Growth recovery is expected in Kenya as inflation eases, while Tanzania’s will strengthen on a rebound in investment growth.

READ: East Africa leads the pack in economic growth

“Looking ahead, sub-Saharan Africa is projected to see a moderate pickup in activity with growth rising to 3.2 per cent in 2018 and 3.5 per cent in 2019,” the report notes, but on the assumption that commodity prices will firm and domestic demand gradually gains, helped by slowing inflation and easing monetary policy.

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