16 January 2013

Africa: World Bank Projects Five Percent Growth Rate for Sub-Saharan Africa

Photo: Chris Kirchoff/MediaClubSA
Keneuwe Monakale tests water quality at a brewery.

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An excerpt from the 2013 World Bank report, Global Economic Prospects, dealing with Sub-Saharan Africa:

Medium-term growth prospects remain strong and should be supported by a pick-up in the global economy, still high commodity prices, and increased investment.

Since 2000, investment in the region has increased steadily from 15.9 percent of GDP to over 22 percent of GDP in 2012. This is expected to continue, particularly so as an increasing number of the region’s economies are able to tap into international capital markets to help address binding infrastructural constraints (in 2012 Zambia issued its debut international bond, a $750 million Euro bond, which was oversubscribed by 15 times).

Further, the ongoing increase in export volumes from several countries that have discovered mineral deposits in recent years (Ghana, Kenya, Mozambique, Niger, Sierra Leone, Tanzania, and Uganda) should boost growth prospects.

Overall, the region is projected to grow at its pre-crisis average rate of 5 percent over the 2013-15 period (4.9 percent in 2013, gradually strengthening to 5.2 percent in 2015). Excluding, South Africa, the region’s growth will average 6% over the 2013-15 period.

Risks and vulnerabilities:

Risks to the outlook remain tilted to the downside, as weaker growth in China, ongoing fiscal consolidation in the Euro Area and the United States could potentially derail the region’s growth prospects.

Further, a number of domestic concerns could be a drag on growth in the region.

Euro Area debt crisis.

Although the worst appears to be over, should a credit crunch hit some of the larger troubled Euro Area economies, GDP growth in the region could decline by one percentage point.

Weak US economy.

Fiscal policy paralysis in the US could curtail growth in the region by at least 0.9 percentage points in the 2013.

China investment.

With Chinese demand accounting for some 50 percent of many industrial metals exported from Africa, a disorderly unwinding of China’s high investment rate could lead to deteriorating current account and fiscal balances, and cut into the region’s growth prospects.

Domestic factors.

Political instability, protracted industrial disputes and adverse weather conditions could also undermine growth in a few countries in the region.

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