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IMF sees sub-Saharan Africa growth near two-decade low in 2016

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Economic growth in sub-Saharan Africa will likely slow this year to its weakest in nearly two decades, hurt by a slump in commodity prices, the Ebola virus outbreak and drought, the IMF said on Tuesday.

In its African Economic Outlook, the Fund said the region would likely grow 3 percent this year – the lowest rate since 1999 – after expanding by 3.4 percent in 2015.

Growth was seen recovering to 4 percent next year, helped by a slight recovery in commodity prices, and the Fund said it was still optimistic about the region’s prospects in the longer term.

“However, to realise this potential, a substantial policy reset is critical in many cases,” the Fund said.

Affected countries needed to contain fiscal deficits as the reduction in revenue from the commodities sector was expected to persist, it added.

Major oil exporters Angola and Nigeria were hardest hit by the slump in commodities prices, as were Ghana, South Africa and Zambia, the report said.

Guinea, Liberia, and Sierra Leone were only gradually recovering from the Ebola epidemic, while several southern and eastern African countries including Ethiopia, Malawi and Zimbabwe were suffering from a severe drought, the IMF added.

On the upside, Côte d’Ivoire, Kenya and Senegal would see growth of more than 5 percent, mostly “supported by ongoing infrastructure investment efforts and strong private consumption,” the report said.

“The decline in oil prices has also helped these countries, though the windfall has tended to be smaller than expected, as exposure to the decline in other commodity prices and currency depreciations have partly offset the gains in many of them,” it added.

 

(Reporting by Olivia Kumwenda-Mtambo; Editing by Andrew Heavens)

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World Bank sees faster Kenyan economic growth this year and next

Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s economic growth is expected to accelerate both this year and next, helped by low oil prices, improved agricultural output, a supportive monetary policy and infrastructure investments, the World Bank said on Thursday.

However, the bank also warned of possible risks, stemming partly from uncertainty over Kenya’s presidential, parliamentary and regional government elections scheduled for August 2017.

“These (risks) include the possibility that investors could defer investment decisions until after the elections, that election-related expenditure could result in a cutback in infrastructure spending and that security remains a threat, not just in Kenya, but globally,” it said in a report on Kenya.

Other risks to the outlook include subdued prices of coffee and tea, key hard currency earners, the World Bank added.

Kenya’s gross domestic product will increase by 5.9 percent in 2016 and by 6 percent in 2017, above an estimated 5.6 percent expansion last year, the bank said.

The east African nation’s government expects the economy to grow by 6.0 to 6.5 percent in 2016.

The World Bank cited the benefits of cheaper oil, good weather that is supporting farming, an appropriate monetary policy stance and sustained investments in roads and railways.

But while Kenya’s economy is faring better than others on the continent, it is still struggling to create enough jobs, which means a large section of the population is not enjoying the benefits of the economic expansion, the bank said.

Most of the jobs being created are of low productivity in the informal services sector, the World Bank said.

In the next decade, nine million young people are expected to join the labour market, with most of them getting work in small businesses due to a scarcity of formal sector jobs, it added.

“Formal firms will not create jobs for all young Kenyans,” the bank said in its twice-yearly Kenya Economic Update.

The World Bank said in another report in early March that while Kenya’s economic growth in the past decade may be remarkable by Kenyan standards, it was not even close to stellar when viewed from a broader perspective.

 

(By George Obulutsa. Editing by Duncan Miriri and Gareth Jones)

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