Dar es Salaam. East Africa’s economy is projected to grow at an average of 4.1 percent in 2021 from 0.4 percent recorded in 2020, supported by the global economic recovery.
The projections are contained in the African Development Bank (AfDB) report unveiled yesterday.
However, the East African Economic Outlook report, shows that Tanzania’s economy will grow at a lower rate than the 4 percent registered in 2020.
AfDB lead economist Marcellin Ndong Ntah said commodity exporters (like Tanzania) have been slightly more resilient due to rising prices of commodities, particularly gold.
An economist, who doubles as Repoa executive director Donald Mmari, who reacted to the projections, said Tanzania can do better with the ongoing government efforts to stimulate the economy.
Noting that Tanzania is not an island, he said, the lower growth rate projection for 2021 compared to that of 2020 was attributed to the impact of the Covid-19.
“We do business with other countries which are hit by the pandemic. In a way, we depend on capital from abroad. That is why we are also affected despite the government’s efforts to improve the domestic business environment,” stressed Dr Mmari.
However, along with other government measures, he said the recent Sh1.3 trillion loan from the International Monetary Fund (IMF), would act as a catalyst to cushion the economy.
This is because it would present opportunities for members of the business community to implement various development projects and thus bolster circulation of money.
Kenya’s economic growth is projected to grow by 6.3 percent, from -0.1 percent recession last year, beating all of its peers in the bloc.
“Countries that are more diversified (like Kenya) have experienced fewer adverse impacts,” said Dr Ntah.
Rwanda, Uganda and Burundi’s economies are forecast to grow at 5.1 percent, 4.0 percent and 2.0 percent, respectively.
Speaking during the launch of the report held in Nairobi, Kenya, AfDB director general for the East Africa Region Nnenna Nwabufo attributed the positive economic outlook to several East African countries’ measures to mitigate the impacts of the pandemic.
They include, Ms Nwabufo cited, emergency responses to strengthen healthcare, fiscal and monetary policy stimulus packages to support economic activity, and increased social spending to protect vulnerable livelihoods and groups.
Other measures, she said, had included rationalizing nonpriority spending to create fiscal space as revenues fell and rescheduling debt service obligations to free up resources,” she said.
“These policy measures have helped most of the region’s countries avoid sliding into recessions,” hinted Ms Nwabufo. They, she added, have also helped reduce the number of vulnerable populations falling into poverty.
But the report suggests that long-term strategies—like establishing industrial clusters to accelerate structural transformation and diversification—are needed to consolidate the short-term gains achieved through the policy measures.
Meanwhile, according to the report, Covid-related shocks have increased poverty in the region, with the share of people living in extreme poverty rising to 35 percent in 2021, or 134.3 million human beings.
The pandemic caused 12.3 million people in the region—3.4 percent of the 2019 population—to fall into extreme poverty.
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