In Summary

However, this growth will remain below pre-crisis averages, partly reflecting a struggle in larger economies to boost private investment.

Dar es Salaam. Economic growth in the Africa region is projected to continue to rise to 3.2 per cent in 2018 and to 3.5 in 2019, on the back of firming commodity prices and gradually strengthening domestic demand.
However, this growth will remain below pre-crisis averages, partly reflecting a struggle in larger economies to boost private investment.
According to the World Bank latest analysis of Global Economic Prospects (GEP), South Africa is forecast to tick up to 1.1 per cent growth in 2018 from 0.8 per cent in 2017.
“The recovery is expected to solidify, as improving business sentiment supports a modest rise in investment,” reads the report.
However, policy uncertainty is likely to remain and could slow needed structural reforms.
Nigeria is anticipated to accelerate to a 2.5 per cent rate this year from 1 per cent growth in the year just ended.
An upward revision to Nigeria’s forecast is based on expectation that oil production will continue to recover and that reforms will lift non-oil sector growth.
Growth in Angola is expected to increase to 1.6 per cent in 2018, as a successful political transition improves the possibility of reforms that perfect the business environment.
The regional outlook is subject to external and domestic risks, and is tilted to the downside.
“Although stronger-than-expected activity in the United States and Euro Area could push regional growth up due to greater exports and increased mining and infrastructure investment, an abrupt slowdown in China could generate adverse spillovers to the region through lower-than-expected commodity prices,” read the report.
On the domestic front, excessive external borrowing without forward-looking budget management could worsen debt dynamics and hurt growth in many countries.
A steeper-than-anticipated tightening of global financing conditions could also lead to a reversal in capital flows to the region.
Prolonged political and policy uncertainty could further hurt confidence and deter investment in some countries.
Rising government debt levels highlight the importance of fiscal adjustment to contain fiscal deficits and maintain financial stability.
Structural policies including education, health, labor market, governance, and business climate reforms could help bolster potential growth.