The World Bank said it has cut its growth forecast for Sub-Saharan Africa this year to 2.8 percent from an initial 3.3 percent.
The bank said the commodity price slump of 2015 cut short a decade of rapid growth for the region, noting growth would take longer to recover as a decline in industrial production and a trade dispute between China and the United States take their toll.
The World Bank’s 2019 forecast means economic growth will lag population growth for the fourth year in a row and it will remain stuck below 3 percent, which it slipped to in 2015. In its latest report on the regional economy, the bank also cut its 2018 growth estimate to 2.3 percent from last October’s prediction of 2.7 percent growth for last year.
According to the World Bank, “the slower-than-expected overall growth reflects ongoing global uncertainty, but increasingly comes from domestic macroeconomic instability including poorly managed debt, inflation and deficits”.
The bank noted that Nigeria, South Africa and Angola, which make up about 60 percent of Sub-Saharan Africa’s annual economic output, were all facing various challenges, curbing their contribution to the growth momentum. It said “this downward revision reflects slower growth in Nigeria and Angola, due to challenges in the oil sector, and subdued investment growth in South Africa, due to low business confidence”.
The World Bank also said high inflation and heavy debt loads discouraged investors in economies such as Zambia and Liberia, hitting their growth prospects.
The bank said rates of debt in the region are growing and the type of borrowing that countries are undertaking is exposing them to vulnerabilities. It revealed that “external debt is shifting from traditional, concessional, publicly guaranteed sources to more private, market-based, and expensive sources of finance, putting countries at risk”.
The report published by World Bank said “by the end of 2018, nearly half of the countries in Sub-Saharan Africa covered under the Low-Income Country Debt Sustainability Framework were at high risk of debt distress or in debt distress, more than double the number in 2013”.
In the report, it was noted that economies that do not depend on commodities such as Rwanda, Uganda, Kenya, Benin and Ivory Coast, continued to grow strongly.
Albert Zeufack, the chief economist for Africa at the bank, said the region could boost annual growth by about nearly two percentage points if it harnesses information technology more effectively.