Sub-Saharan Africa’s growth to pick at 2.9% in 2017 - World Bank says

Sub-Saharan African growth is expected to pick up modestly to 2.9 percent in 2017 as the region continues to adjust to lower commodity prices. This according to the January 2017 global economic prospects report published by the world bank.

The report which gives a global outlook on the economic prospects is on the theme “Weak Investment in Uncertain Times: Causes, Implications, and Policy Responses.”

According to the report, growth in South Africa and oil exporters is expected to be weaker, while growth in economies that are not natural-resource intensive will remain robust. This will see growth in South Africa edging up to 1.1 percent pace this year.

West African largest economy, Nigeria is also forecasted to rebound from recession and grow at a 1 percent pace while Angola is projected to expand at a 1.2 percent.

The report also analyzes the worrying recent weakening of investment growth in emerging market especially on the African continent and developing economies around the world, which account for one-third of global GDP and about three-quarters of the world’s population and the world’s poor.

In 2015 investment growth fell to 3.4 percent from 10 percent on average in 2010, but saw a decline of half percentage point in 2016.

The report states that slowing investment growth is partly a correction from high pre-crisis levels most economies faced in 2016, but also reflects obstacles to growth that emerging and developing economies have faced, including low oil prices (for oil exporters), slowing foreign direct investment (for commodity importers), and more broadly, private debt burdens and political risk.

World Bank’s Chief Economist Paul Romer commenting on the report stated “we can help governments offer the private sector more opportunities to invest with confidence that the new capital it produces can plug into the infrastructure of global connectivity.”

“Without new streets, the private sector has no incentive to invest in the physical capital of new buildings. Without new work space connected to new living space, the billions of people who want to join the modern economy will lose the chance to invest in the human capital that comes from learning on the job,” he said.

A global overview shows a global economic growth to accelerate moderately to 2.7 percent in 2017 even though 2016 saw low growth. This was due to obstacles that saw recession in activity among emerging markets and developing economy commodity exporters, while domestic demand remains solid among emerging and developing commodity importers.

World Bank’s January 2017 also reveals that growth in advanced economies is expected to rise to 1.8 percent in 2017.

In the report fiscal stimulus in major economies like United States could generate faster domestic and global growth than projected, although rising trade protection could have adverse effects while growth in emerging market and developing economies as a whole should pick up to 4.2 percent this year from 3.4 percent in the year just ended amid modestly rising commodity prices.