11 February 2013

East Africa: Region Urged to Ease Monetary Policies

Kampala — A World Bank report has warned the region on monetary policies saying they would cause the region to grow at its pre-crisis average of five percent during the 2013-15 periods.

The report released recently on the theme "Global Economic Prospects 2013" said that growth in Sub Saharan region of which the EAC is part of had a robust domestic demand, high commodity prices, increased export volumes due to new capacity in the natural resource sector and steady remittance flows that supported growth in 2012.

"Growth in Sub-Saharan Africa remained robust at 4.6% in 2012 and excluding South Africa, the region's largest economy and gross domestic product output expanded 5.8% in 2012, with a third of countries in the region growing by at least 6%," said the report.

"However, the expansion was curtailed by domestic factors, including earlier monetary policy tightening in Kenya and Uganda, protracted labor disputes in South Africa and political unrest Mali and Guinea Bissau," he said adding that the region is projected to grow at its pre-crisis average of 5 percent during 2013-15.

It explained that four years after the onset of the global financial crisis, the world economy remains fragile and growth in high-income countries is weak.

EA and other developing 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, says the World Bank in the newly-released Global Economic Prospects (GEP) report.

"The economic recovery remains fragile and uncertain, clouding the prospect for rapid improvement and a return to more robust economic growth," said World Bank Group President Jim Yong Kim.

"Developing countries have remained remarkably resilient thus far. But we can't wait for a return to growth in the high-income countries, so we have to continue to support developing countries in making investments in infrastructure, health, in education in the future."

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