The World Bank has
projected that Sub-Saharan Africa would record modest economic growth
recovery of 2.4 per cent in 2017 after the region grew by just 1.3 per
cent in 2016.
In its new Africa's
Pulse, a bi-annual analysis of the state of ...
African economies, the
World Bank however warns that the pace of the recovery remains sluggish
and will be insufficient to lift per capita income in 2017.
Albert Zeufack,
World Bank Chief Economist for Africa, 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," Zeufack said in the
report released in Nairobi.
The World Bank said the economic rebound is led by the region's largest economies.
In the second
quarter of this year, Nigeria pulled out of a five-quarter recession and
South Africa emerged from two consecutive quarters of negative growth.
The Pulse says
improving global conditions, including rising energy and metals prices
and increased capital inflows, have helped support the recovery in
regional growth.
"Growth continues
to be multispeed 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," says the
report.
The Africa's Pulse
notes that headline inflation slowed across the region in 2017 amid
stable exchange rates and slowing food price inflation due to higher
food production.
It says 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."
The World Bank said
Sub-Saharan Africa is 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 gains
ground, helped by slowing inflation and monetary policy easing.
However, growth
prospects will remain weak in the Central African Economic and Monetary
Community (CEMAC) countries as they struggle to adjust to low oil
prices.
The report says
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 Cote d'Ivoire and Senegal.
"The outlook for
the region remains challenging as economic growth remains well below the
pre-crisis average," said Punam Chuhan-Pole, World Bank Lead Economist
and lead author of the report.
"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."
According to the
report, growth is forecast to firm in Tanzania on a rebound in
investment growth and recover in Kenya, as inflation eases.
Ethiopia, the
report says, is likely to remain the fastest-growing economy in the
region, although public investment is expected to slow down.
Analysis shows that
rising capital accumulation has been accompanied by falling efficiency
of investment spending in countries where economic growth has been less
resilient to exogenous shocks.
This suggests that
the inefficiency of investment, which reflects insufficient skills and
other capabilities for the adoption of new technologies, distortive
policies, and resource misallocation, among other things, will need to
be reduced if countries are to capture fully the benefits of higher
investment.
The report says
investing in the foundational skills of children, youth, and adults is
the most effective strategy to enhance productivity growth, inclusion,
and adaptability simultaneously.
"Thus, all
countries should prioritise building universal foundational skills for
the workers of today and tomorrow," says the report, which also notes
that as African countries seek new drivers of sustained inclusive
growth, attention to skills building is growing.
NAN
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