Africa growth los­ing steam: WB

Lesotho Times - - Business -

SUB-SA­HA­RAN Africa’s economies have lost steam be­cause of the col­lapse of global com­mod­ity prices and will con­tinue to strug­gle to re­gain mo­men­tum this year, The World Bank warned Mon­day.

The av­er­age growth rate in the re­gion came in at three per­cent last year, a se­vere slow­down of 1.5 per­cent­age points from the year be­fore, The World Bank said in its twice-yearly Africa Pulse eco­nomic up­date. That is the slow­est rate of eco­nomic ex­pan­sion since 2009, when sub-sa­ha­ran Africa suf­fered de­layed blow­back form the global fi­nan­cial cri­sis.

In 2016, growth is seen ac­cel­er­at­ing a lit­tle, to 3.3 per­cent points, a per­for­mance the Bank calls “lack­lus­ter”.

The re­port blamed “low com­mod- ity prices, weak global growth, ris­ing bor­row­ing costs, and ad­verse do­mes­tic de­vel­op­ments in many coun­tries” for the slow­down across the re­gion, not­ing that worst-hit were “the re­gion’s largest com­mod­ity ex­porters.”

Still, the World Bank sin­gled out some “bright spots” on the con­ti­nent, nam­ing Ivory Coast and Kenya as good per­form­ers. Ivory Coast is a ma­jor co­coa ex­porter and hasn’t been af­fected by the com­modi­ties crash, while Kenya, east Africa’s big­gest econ­omy, is a net im­porter of en­ergy, mean­ing it is set to ben­e­fit from low oil prices.

A stronger re­cov­ery would have to wait un­til be­tween 2017 to 2018, the World Bank said, pre­dict­ing a re­turn to a 4.5 per­cent av­er­age growth rate hing­ing on the eco­nomic re­cov­ery of the con­ti­nent’s big­gest econ­omy, Nige­ria, as well as South Africa and An­gola.

An­gola last week an­nounced it was in talks to se­cure a bailout from the In­ter­na­tional Mon­e­tary Fund, weeks af­ter Kenya had said it had re­newed and even boosted a pre­cau­tion­ary loan agree­ment. The Fund is help­ing Mozam­bique and Ghana with loans, too, and is ex­pected to be­gin talks in earnest with Zam­bia later this year. Nige­ria and An­gola are the con­ti­nent’s top two crude oil ex­porters whose economies have suf­fered as a re­sult of sharply lower crude prices, while South Africa was also hit by lower plat­inum, iron ore and coal prices.

The in­creased IMF lend­ing ac­tiv­ity across the con­ti­nent high­lights the higher bor­row­ing costs th­ese coun­tries are fac­ing in in­ter­na­tional cap­i­tal mar­kets, a sharp change since 2013 when Eu­robond is­suance by African sov­er­eigns was be- com­ing a grow­ing trend.

It also marks an about turn for many of th­ese coun­tries now rush­ing to get IMF ex­per­tise in eco­nomic pol­icy-mak­ing, hav­ing in re­cent years con­cluded IMF pro­grams and pledged never to look back.

The World Bank re­port warned of “down­side risks,” mean­ing that its pre­dic­tions for growth this year and next were still vul­ner­a­ble be­cause of the global eco­nomic en­vi­ron­ment, in par­tic­u­lar com­mod­ity prices, but also China’s in­dus­trial slow­down.

— Bdlive

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