22 January 2013

East Africa: World Bank Recognizes Regional Growth

Photo: Maria Font de Matas/IRIN
A migrant worker (file photo).

Last week, the World Bank released a very comprehensive report so far of the world's economic outlook.

The 2013 Global Economic Prospects Report (GEP) analyses the economic trends four years back after the onset of the global financial crisis.

The report showed how, the global economy remains fragile and growth in high-income countries is weak.

Apart from South Africa, GDP growth in the region was at strong 5.8% in 2012, with a third of countries in the region growing by at least 6%.

In East Africa, Rwanda recorded the highest growth figures in 2012 at 7.7%. This was followed by Tanzania at 6.5%, Kenya at 4.3, Burundi 4.1% and Uganda at 3.4%.

Forecasts for 2013 are projected at Rwanda 7.5%, Tanzania 6.8%, Uganda 6.2%, Kenya 4.9% and Burundi at 4.3%.

According to the World Bank, robust domestic demand, steady remittance flows, still high commodity prices, and increased export volumes were supportive of the region's growth in 2012.

Nonetheless, the report says, besides the drag from a weaker global economy, domestic factors, including earlier monetary policy tightening (Kenya and Uganda weakened growth in a number of countries in the region.

Economic activity was similarly diverse in the region. High commodity prices and relatively robust growth prospects, net private capital flows increased.

Exports grew strongly in the first half of the year; however, a sharp deceleration of industrial commodities and oil exports occurred in the third quarter. Tourism, an important driver of growth in the region, remained robust.

The report states that the medium term Outlook: 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.

The report further named EAC countries among states that showed ongoing increase in export volumes from discoveries of mineral deposits in recent years like Kenya, Tanzania, and Uganda).

This, the report states should boost growth prospects. Overall, East Africa is projected to grow at its pre-crisis average.

The report recommends that our (EAC) countries need to focus on raising the growth potential of their economies, while strengthening buffers to deal with risks from the Euro Area and fiscal policy in the United States.

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