Categories: Stories

World Bank lowers regional growth forecast

The World Bank has revised downwards its growth forecast for Sub-Saharan Africa from 4.4 percent to 3.3 percent due to depressed commodity prices, but sees a likely recovery in 2017.

Economic activity in the region slowed last year, with GDP growth averaging three percent, down from 4.5 percent in 2014.

Fellow Bretton Woods institution, the International Monetary Fund, last month forecast Zimbabwe’s economic growth at a modest 1.4 percent this year from 1.1 percent last year.

The World Bank’s African Pulse report, says the fall in commodity prices represents a significant shock for the region, as fuels, ore and metals account for more than 60 percent of the region’s exports.

“African Pulse finds that the recent commodity price drops have deteriorated the region’s terms of trade in 2016 by an estimated 16 percent, with commodity exporters seeing large terms-of-trade losses,” the report says.

After recording double digit growth rates following the adoption of the multi-currency regime in 2009, Zimbabwe, like the rest of the commodity-driven sub-Saharan region, is now suffering due to an underperforming Chinese economy which has driven commodity prices down.

Zimbabwe is also suffering from lack of domestic liquidity which, combined with poor foreign direct inflows (FDI), will continue to have a negative impact on growth. The slowdown in the region will further strain Zimbabwe’s economy.

“This low pace of growth, which translates into an increase in the region’s GDP per capita of less than 0.5 percent, was last seen in 2009 following the global financial crisis, and contrasts sharply with the robust 6.8 percent average annual GDP growth in Sub-Saharan Africa (SSA) from 2003-2008,” says the World Bank.

The report also notes that adverse domestic developments, such as electricity shortages, severe drought conditions, policy uncertainty, and security threats have worsened the direct impact of declining commodity prices.

For 2017–18, growth in the region is projected to average 4.5 percent.- The Source

(28 VIEWS)

This post was last modified on %s = human-readable time difference 8:40 am

Charles Rukuni

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

Recent Posts

Can the ZiG sustain its rally against the US dollar?

Zimbabwe’s battered currency, the Zimbabwe Gold, which was under attack until the central bank devalued…

November 10, 2024

Will Mnangagwa go against the trend in the region?

Plans by the ruling Zimbabwe African National Union-Patriotic Front to push President Emmerson Mnangagwa to…

October 22, 2024

The Zimbabwe government and not saboteurs sabotaging ZiG

The Zimbabwe government’s insatiable demand for money to satisfy its own needs, which has exceeded…

October 20, 2024

The Zimbabwe Gold will regain its value if the government does this…

Economist Eddie Cross says the Zimbabwe Gold (ZiG) will regain its value if the government…

October 16, 2024

Is Harare the least democratic province in Zimbabwe?

Zimbabwe’s capital, Harare, which is a metropolitan province, is the least democratic province in the…

October 11, 2024

Zimbabweans against extension of presidential term in office

Nearly 80% of Zimbabweans are against the extension of the president’s term in office, according…

October 11, 2024