World Bank forecast economic growth for Sub-Saharan Africa as Malawi is on rebound

The World Bank has predicted an economic growth for Sub-Saharan Africa after registering the worst decline in more than two decades in 2016, a good news for Malawi currently regaining from its economic downslide.

Minister of Finance, Economic planning and Development Goodall Gondwe (L)and the World Bank Country Manager Ms Laura Kullenberg

World Bank through it’s a bi-annual analysis of the state of African economies called “Africa’s Pulse” has revealed that the region is showing signs of recovery, and regional growth is projected to reach 2.6% in 2017.

The economic rebound comes on a background of a slowdown in investment growth from nearly 8% to 0.6% in between 2014 and 2015.

While the news of the economic rebound might be good for Malawi, the Bank has warned that the recovery remains weak, with growth expected to rise only slightly above population growth, a pace that hampers efforts to boost employment and reduce poverty.

Africa’s Pulse’s report also noted that the global economic outlook is improving and should support the recovery in the region, adding that the continent’s aggregate growth is expected to rise to 3.2% in 2018 and 3.5% in 2019, reflecting a recovery in the largest economies.

“It will remain subdued for oil exporters, while metal exporters are projected to see a moderate uptick. GDP growth in countries whose economies depend less on extractive commodities should remain robust, underpinned by infrastructure investments, resilient services sectors, and the recovery of agricultural production. This is especially the case for Ethiopia, Senegal, and Tanzania.”

The report further indicated that a stronger-than-expected tightening of global financing conditions, weaker improvements in commodity prices, and a rise in protectionist sentiment represent downside external risks to the outlook.

World Bank Chief Economist for the Africa Region, Albert G. Zeufack in his comment said while countries move towards fiscal adjustment, there was a need to protect the right conditions for investment so that Sub-Saharan African countries achieve a more robust recovery.

“We need to implement reforms that increase the productivity of African workers and create a stable macroeconomic environment. Better and more productive jobs are instrumental to tackling poverty on the continent,” he said.

The report highlighted that the continent is in dire need of necessary reforms to boost investment and tackle poverty, and that countries also have to undertake much-needed development spending while avoiding increasing debt to unsustainable levels.

“In this environment, fostering public and private investment, notably in infrastructure, is a priority. The region experienced a slowdown in investment growth from nearly 8% in 2014 to 0.6% in 2015,” reads in part the report.

The Africa’s Pulse report dedicates a special section to analyzing the region’s infrastructure performance across sectors, revealing dramatic improvements in quantity and quality of telecommunications contrasted by persistent lags in electricity generation and access.

“With poverty rates still high, regaining the growth momentum is imperative,” said Punam Chuhan-Pole, World Bank Lead Economist and the author of the report.

“Growth needs to be more inclusive and will involve tackling the slowdown in investment and the high trade logistics that stand in the way of competitiveness.”

Overall, the report has called for the urgent implementation of reforms to improve institutions that foster private sector growth, develop local capital markets, improve infrastructure, and strengthen domestic resource mobilization.

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