Ethiopia and Côte d’Ivoire are both expected to grow at or above 8 percent this year, according to a new report by the World Bank. The Global Economic Prospect report shows that large infrastructure investment programs will continue to support robust growth among agriculture exporters. This is the main reason that the projected growth rate of the two countries is expected to increase.
Ethiopia is expected to grow at 8.6 percent both in 2018 and 2019.
For countries like Burundi and The Gambia, political fragility is expected to exert a drag on growth while commodity imports are expected to help Cabo Verde grow at a 3.3 percent, Mauritius is to rise moderately to 3.5 percent, and Seychelles should slow to a 3.5 percent clip as uncertainty in Europe weighs on tourism, investment, and trade flows.
Looking at the just past year, growth in the Sub-Saharan Africa region is estimated to have slowed to a 1.5 percent rate in 2016, the weakest pace in over two decades, as commodity exporting economies adjusted to low prices. On a per capita basis, regional GDP contracted by an estimated 1.1 percent. South Africa and oil exporters, which contribute two-thirds of regional output, accounted for most of the slowdown, while activity in non-resource intensive economies generally remained robust.
In South Africa, growth slowed to 0.4 percent in 2016, reflecting the effects of low commodity prices and heightened governance concerns. The region’s two largest oil exporters, Angola, where growth slowed to a 0.4 percent rate, and Nigeria, which contracted by 1.7 percent – faced severe economic and financial strains. Other oil exporters were also hit hard by low oil prices, with Chad contracting by 3.5 percent and Equatorial Guinea shrinking by 5.7 percent.
Looking into the possible risks globally, the report states that heightened policy uncertainty in the United States and Europe could lead to financial market volatility and higher borrowing costs or cut off capital flows to emerging and frontier markets. A reversal of flows to the region would hit heavily traded currencies, like the South African Rand, hard.
A sharper-than-expected slowdown in China could weigh on demand for export commodities and undermine prices. Continued weakness in commodity prices would strain fiscal and current account balances, forcing spending cuts that could weaken recovery and investment.