Africa’s economic growth has been moderate at 3.7 percent in 2015, according to the World Economic Situation and Prospects (WESP) 2016 report, launched in Ethiopia on Tuesday January 26at the United Nations Economic Commission for Africa (UNECA).
Growth has slowed down in 2015 compared to a rate of 3.9 in 2014, however, the current rate of growth is still promising according to the report that looks at and examines the situation of the world’s economy focusing on challenges and recommendation.
Africa’s economy last year was driven by consumption and investment with government spending, especially on infrastructure projects, positively contributing to growth over the period. On the other hand, the external balance has negatively impacted growth in 2015, mainly because of weak demand for and volatile prices of commodities, the report underlines.
In 2016 economic prospects are expected to be brighter, increasing to 4.4 percent for the year and Africa’s medium-term prospects remaining positive despite uncertainty in the global economy and the weakening of oil and commodity prices.
Countries with economies dependent on single commodity, especially oil, remain vulnerable to continuous sharp drops in oil prices. Further challenges lay ahead for African economies, declining commodity prices and currency depreciations will continue to threaten growth and the possibility of high interest rates in the United States could divert investment flows from Africa. Not new to this year, climactic shocks and security remain as risks to Africa’s prospects in the short and medium term, according to the report.
As major trading and financing partners such as China and the Euro zone exhibit weaker growth rates, Africa must overcome its challenges and look for a way forward to grow.