East African Economies Show Resilience While Oil Dependent Countries Stumble Amid Global Fuel Crisis, ICAEW Report Reveals

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Economic growth in East Africa has managed to remain resilient in the face of political shocks that threatened to undermine the regional market.

A new report from the Institute of Chartered Accountants in England and Wales’ (ICAEW’s) has revealed that diversified and services-led economies have had a good year whereas hydrocarbon-dependent African economies continue to be plagued by the aftershock of a global oil price slump.

The analysis, titled ‘Economic Insight: Africa Q4 2017’ points to braking of overall growth as a result of problems in the big economies like Angola, Nigeria and South Africa.

The report was launched this week and commissioned by ICAEW – a world leading professional membership organisation that promotes, develops and supports over 144,000 chartered accountants worldwide. It was produced by partner and leading research group Oxford Economics. The research provides a snapshot of the region’s economic performance. The report focuses on East, Southern, Central and West Africa.

According to the report, the biggest contributor to East Africa’s economic expansion was Ethiopia, accounting for a full 2% of regional GDP growth, with its stellar performance of 7.1%. Kenya followed closely with a 1.7% increase in regional output, having posted 4.6% growth. Both regional powerhouses had some political problems during the year, without which their economic performances would have been better.

“Despite having experienced tough political environments, Kenya and Ethiopia posted good growth margins,” Michael Armstrong, Regional Director, ICAEW Middle East, Africa and South Asia said.

“Without the political uncertainty the two East African countries would have seen even better growth,” he added.

In Kenya, a disputed election and subsequent repeat election, delayed some investment decisions while protests in some areas hampered business. In Ethiopia, overall economic dynamism resulting from large-scale investment and modernisation continues apace, but severe foreign exchange liquidity constraints will weigh on economic activity going forward.

West Africa is forecast to show the strongest growth of any region on the continent with an overall growth of 7.6%. Apart from Nigeria, whose economy is recovering, the fortunes of the countries within that region are mixed. The bigger, more diversified economies in the franc zone had a good year: Senegal is forecast to show real growth of 6.6% this year, just behind the Ivory Coast’s 6.8%. The Ivory Coast’s figure would have been higher, but a weak cocoa harvest and soft prices on international markets dragged down output.

Central Africa’s performance continues to be dragged down by the contraction in the Congo Republic and the comparative trouble of the region’s other oil-dependent economies, especially Chad and Gabon.

Meanwhile, Southern Africa continues to tread water owing to the sluggish performance of its biggest economies, South Africa and Angola.

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