Economic growth in Africa will exceed five per cent in 2015-16
Posted on :Thursday , 9th October 2014
Despite weaker than expected global growth and stable or declining commodity prices, African economies continue to expand at a moderately rapid pace, with regional GDP growth projected to strengthen to 5.2 percent yearly in 2015-16 from 4.6 percent in 2014, according to a recent World Bank report.
Significant public investment in infrastructure, increased agricultural production and expanding services in African retail, telecoms, transportation, and finance, are expected to continue to boost growth in the region.
This pick-up in growth is expected to occur in a context of lower commodity prices and lower foreign direct investment as a result of subdued global economic conditions.
Commodity prices remain highly significant to Africa’s outlook since, as the report notes, “primary commodities continue to account for three-quarters of Sub-Saharan Africa’s total goods exports, and the share of the region’s top five exports in total exports has climbed to 60 percent in 2013 from 41 percent in 1995.”
“Overall, Africa is forecast to remain one of the world’s three fastest growing regions and to maintain its impressive 20 years of continuous expansion” says Francisco Ferreira, the World Bank’s Chief Economist for Africa. “Downside risks that require enhanced preparedness include rising fiscal deficits in a number of countries; economic fallouts from the activities of terrorist groups such as Boko Haram and Al Shabaab and, most urgently, the onslaught of the Ebola epidemic in West Africa.”
A World Bank study of the likely economic impact of Ebola, released last month, suggested that if the virus continues to spread in the three worst-affected countries, its economic impact could grow eight-fold, dealing a potentially catastrophic blow to the already fragile states of Guinea, Liberia and Sierra Leone.
The World Bank Group is mobilizing a $400 million financing package for the countries hardest hit by the crisis.
In a special study of Africa’s patterns of structural transformation and poverty dynamics, the World Bank finds that the region is largely bypassing industrialization as a major driver of growth and jobs.
Instead, the study says, extractive industries in the natural resources sector and a surging services industry are propelling Africa’s growth. Output shares of manufacturing and agriculture are declining across the region, although most workers – and almost 80% of the poor – still derive the bulk of their income from farming.
“Nearly two decades of strong growth is transforming Africa’s economies, but the structural change is not what the world expected.
The majority of Africa’s jobs continues to be in agriculture and is surging into services - but not into industry and manufacturing,” says Punam Chuhan-Pole, a World Bank Lead Economist for Africa and co-author of Africa’s Pulse. “The good news is that in Africa this growth in agriculture and the services sector has been more effective in reducing poverty than growth in industry. In the rest of the world, by contrast, industry and services have a larger impact on reducing poverty.”
Finally, as the new report notes, “while manufacturing may not provide a panacea, Africa can and should expand its manufacturing base, especially by boosting its fundamentals - business climate, macro economic stability, reliable and affordable energy, lower transport costs and a more skilled labor force - which will benefit all sectors.”
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