The International Monetary Fund has said that the economic growth witnessed in Sub-Saharan Africa is moving at a modest pace as projected to increase from 1.3 per cent in 2016 to 2.4 per cent by the end of 2017.
The global institution, in its bi-annual analysis of the state of African economies, Africa’s Pulse, stated that the rebound witnessed in the region is led by the continent’s largest economies like Nigeria and South Africa, among others.
It noted that in the second quarter of 2017, Nigeria pulled out of a five-quarter recession and South Africa emerged from two consecutive quarters of negative growth.
IMF said, “Improving global conditions, rising energy, metals prices and increased capital inflows, have helped support the recovery in regional growth.
“Growth continues to be multi-speed across the region. In non-resource intensive countries such as Ethiopia and Senegal, growth remains broadly stable supported by infrastructure investments and increased crop production. In metal exporting countries, an increase in output and investment in the mining sector amid rising metals prices, has enabled a rebound in activity.
“Headline inflation slowed across the region in 2017 amid stable exchange rates and slowing food price inflation due to higher food production. Fiscal deficits have narrowed, but continue to be high, as fiscal adjustment measures remain partial. As a result, government debt remains elevated. Across the region, additional efforts are needed to address revenue shortfalls and contain spending to improve fiscal balances.”
World Bank Chief Economist for Africa, Mr. Albert Zeufack, said, “Most countries do not have significant wiggle room, when it comes to having enough fiscal space to cope with economic volatility. It is imperative that countries adopt appropriate fiscal policies and structural measures now to strengthen economic resilience, boost productivity, increase investment, and promote economic diversification.”
Looking ahead, the report indicated that Sub-Saharan Africa was projected to see a moderate increase in economic activity, with growth rising to 3.2 per cent in 2018 and 3.5 per cent in 2019 as commodity prices firm and domestic demand gradually gained ground, helped by slowing inflation and monetary policy easing.
However, it added that the growth prospects would remain weak in the Central African Economic and Monetary Community countries, as they struggle to adjust to low oil prices.
Also, the economic expansion in West African Economic and Monetary Union countries is expected to proceed at a strong pace on the back of solid public investment growth, led by Côte d’Ivoire and Senegal. Elsewhere, growth is projected to firm in Tanzania on a rebound in investment growth and recover in Kenya, as inflation eases. Ethiopia is likely to remain the fastest-growing economy in the region, although public investment is expected to slow down.
“The outlook for the region remains challenging as economic growth remains well below the pre-crisis average,” said World Bank Lead Economist and lead author of the report, Punam Chuhan-Pole. “Moreover, the moderate pace of growth will only yield slow gains in per capita income that will not be enough to harness broad-based prosperity and accelerate poverty reduction.”