• Friday, March 29, 2024
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World Bank sees prolonged economic recovery in SSA

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The World Bank has revised growth forecast for sub-Saharan African (SSA) region by 50 basis points to 2.8 percent on Monday, saying recovery in the region may prolong on the back of dwindled industrial productivity and trade spat between world’s two largest economies, United States and China.
The bank noted that the sharp decline in oil prices in 2015 thwarted a decade of rapid growth in the region. The new forecast implies that economic growth will lag population growth rate for four straight years, and will remain below 3 percent it slipped to in 2015.
According to the World Bank, uncertainties in the global economy, which emanates from domestic macroeconomic instability such as huge debt burden, high inflation rate and fiscal deficits, continue to weigh down on growth of SSA region.
Olayinka Olohunlana, a Lagos-based economic analyst, positioned that growth had gained strong momentum in SSA, as plethora of structural issues remain unaddressed.
“A significant number of countries in the region still face the challenges of poor business climate, infrastructural woes, lack of economic linkages among sector as well as macroeconomic instability. Formidable policies are direly needed for growth to pick up,” she said in a telephone interview.
The World Bank stated that Nigeria, Angola and South Africa, which accounted for 60 percent of total economic output in the region, were bedevilled with myriads of challenges, which thwarted their growth momentum.
“The downward revision reflects slower growth in Nigeria and Angola, due to challenges in the oil sector, and subdued investment growth in South Africa, due to low business confidence,” it said.
The Nigerian economy expanded 1.93 percent in 2018 compared with 0.82 percent recorded the previous year, basically driven by activities in the non-oil sector.
South Africa, which accounts for two-third of Southern Africa economic output, exited its first technical recession in nine years. It grew 1.4 percent in the quarter four of 2018, bringing its annual average growth to 0.8 percent. However, the Bank noted that investors are still cautious due to policy uncertainty.
Oil-rich nation, Angola, which is the third-largest economy in the region, remains trapped in recession on the back of tepid oil production, its most important sector.
The Bank noted that acute inflationary pressures and huge debt burden de-motivated investors in Zambia and Liberia, and had adversely affected their growth potentials, thereby making them more vulnerable to external shocks.
Economies such as Rwanda, Uganda, Kenya, Benin Republic and Ivory Coast that do not depend on commodities are poised to grow stronger, according to the Bank.
Albert Zeufack, chief economist for Africa at the Bank, stated that the regional growth could still improve by 2 percent points if countries could leverage information technology.