East Africa will register the highest regional economic performance on the continent in 2023 and 2024, with growth figures at over 5 percent, according to the newly published African Development Bank 2023 East Africa Economic Outlook.
The report, launched on Thursday 27 July, projects mid-term economic growth in the region to accelerate to 5.1% in 2023 and 5.8 % in 2024, outpacing all the other African regions. This will be largely driven by growth in Rwanda, Uganda, Ethiopia, Kenya, Djibouti, and Tanzania.
According to the report, East Africa’s real GDP was propelled by its services sector, contributing almost half of the economic growth in 2022. The sector contributed 2.0 percentage points to GDP growth, lower than 2.5 percentage points on average for the period 2015-2021. The region's natural and cultural attractions draw tourists from around the world, creating a demand for services like accommodation, food, and entertainment.
The East Africa region, however, faces several external and domestic downside risks that could affect the positive economic outlook. These include a global economic slowdown, rising commodity prices, the continued Russian invasion of Ukraine, international trade policies, tightening of global financial conditions, exchange rate depreciation, and a resurgence of Covid-19.
“The domestic risks include gaps in infrastructure, domestic conflicts and political instability, macroeconomic imbalances, and adverse impacts of climate change,” the report states.
The annual flagship Africa Economic Report of the African Development Bank offers an assessment of the region’s recent macroeconomic performance. The report also examines medium-term projections and the risks to the region’s growth outlook, providing in-depth analysis of topical issues that the region is grappling with.
The theme of the 2023 report is “Mobilizing Private Sector Financing for Climate Change and Green Growth”. It delves into the imperatives for a green transition for Africa and the role of private sector financing. It further presents a case for natural capital as a key source of financing for climate-compatible growth in East Africa.
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