According to the World Bank Report, Africa’s Pulse, economic growth in Sub-Saharan Africa is recovering at a modest pace, and is projected to pick up to 2.4% in 2017 from 1.3% in 2016.
The bi-annual analysis of the state of African economies shows it is below the April forecast of 2.6%.
The analysis indicate that improving global conditions, including rising energy and metals prices and increased capital inflows, have helped support the recovery in regional growth. The rebound is led by the region’s largest economies of Nigeria and South Africa.
However, it warns that the pace of the recovery remains sluggish and will be insufficient to lift per capita income in 2017.
In non-resource intensive countries such as Ethiopia and Senegal, growth remains broadly stable supported by infrastructure investments and increased crop production.
In metal exporting countries, an increase in output and investment in the mining sector amid rising metals prices has enabled a rebound in activity.
The World Bank report states that headline inflation slowed across the region in 2017 amid stable exchange rates and slowing food price inflation due to higher food production.
“Fiscal deficits have narrowed, but continue to be high, as fiscal adjustment measures remain partial. As a result, government debt remains elevated. Across the region, additional efforts are needed to address revenue shortfalls and contain spending to improve fiscal balances.”
According to Albert Zeufack, the World Bank Chief Economist for Africa, “Most countries do not have significant wiggle room when it comes to having enough fiscal space to cope with economic volatility. It is imperative that countries adopt appropriate fiscal policies and structural measures now to strengthen economic resilience, boost productivity, increase investment, and promote economic diversification.”
Sub-Saharan Africa is projected to see a moderate increase in economic activity, with growth rising to 3.2% in 2018 and 3.5% in 2019 as commodity prices firm and domestic demand gradually gains ground, helped by slowing inflation and monetary policy easing.
The Africa’s Pulse report, however, says growth prospects will remain weak in the Central African Economic and Monetary Community (CEMAC) countries as they struggle to adjust to low oil prices.
Analysts recommend that skills-building efforts must strive to make spending smarter to ensure greater efficiency and better outcomes.
They also urge African countries to invest in the foundational skills of children, youth, and adults, whic is “the most effective strategy to enhance productivity growth, inclusion, and adaptability simultaneously.”