WORLD BANK REPORT SAYS EAST AFRICA ECONOMIC GROWTH STRONG

Anticipated flows into East Africa’s oil and gas sector will cushion the region against a drop in economic growth, says the World Bank.

“Growth is expected to be particularly strong in East Africa, increasingly supported by FDI flows into offshore natural gas resources in Tanzania, and the onset of oil production in Uganda and Kenya,” said the Bank in its latest Global Economic Prospects report.

The Bank said growth will remain subdued in South Africa, but will pick up modestly in Angola. Nigeria, the continent’s largest economy, is forecast to remain robust.

Bad weather in the US, the crisis in Ukraine, rebalancing in China, political strife in several middle-income economies, slow progress on structural reform, and capacity constraints are all contributing to a third straight year of below five per cent growth for developing countries. 

In addition, growth rates in the developing world remain far too modest to create jobs needed to improve the lives of the poorest 40 per cent of the population, said World Bank Group president Jim Yong Kim.

“Countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth up to the levels needed to end extreme poverty in our generation,” Mr Kim said.

The bank has lowered its forecasts for developing countries, to 4.8 per cent this year, down from its January estimate of 5.3 per cent.

Excluding South Africa, the average regional GDP growth in sub-Saharan Africa was 6 per cent in 2013. Fiscal and current account deficits widened across the region, reflecting high government spending, falling commodity prices, and strong import growth.

The World Bank said medium-term prospects for the region remain favourable, with GDP growth projected to remain stable at 4.7 per cent in 2014, before rising moderately to 5.1 per cent in 2015 and 2016, supported by firming external demand and investments in natural resources, infrastructure, and agricultural production.

But the Bank cautions that the outlook is prone to risks from lower commodity prices, tightening global financial conditions, and political instability.

The GEP reports reveals that fiscal balances deteriorated further in 2013, especially among oil exporters who faced falling output and lower oil prices. Public debt has risen from 29 per cent of GDP in 2008 to an estimated 34 per cent of GDP in 2013.