ADDIS ABABA – East Africa’s economic growth is projected to return to a pre-pandemic level with a gross domestic product (GDP) averaging above 5% in 2023 and 2024, according to the African Development Bank (AfDB) report.
The growth in the region is estimated to moderate to 4.2% in 2022 from 5.1% in 2021, notes AfDB’s Africa Macroeconomic Performance and Outlook report.
Countries in the region are largely net importers of commodities, often bearing the brunt of high global prices and recurrent climate shocks.
“The slowdown in 2022 was therefore mainly attributed to effects of these shocks, exacerbated by disruptions to global supply chains,” says the report released on Thursday.
Tight monetary and fiscal policies to rein in inflation have also constrained domestic household consumer demand, amplifying the effects of exogenous shocks on the economic activity of the region, home to some of the most fragile economies due to internal conflicts.
However, AfDB’s report has forecasted the region’s economic growth to increase at a pre-pandemic rate, projecting the rate to rise to 5.0% in 2024 and 5.4% in 2024.
Rwanda is projected to lead growth in this region in 2023 and 2024, at rates above 7%, benefiting from raising infrastructure spending.
Uganda and Ethiopia are also projected to grow strongly in 2023 and 2024, exceeding the 5% mark on account of developments in the oil sector for Uganda and continued infrastructure spending for Ethiopia.
Africa to Outperform the rest
All the continent’s five regions remain resilient with a steady outlook for the medium-term, despite facing significant headwinds due to global socio-economic shocks.
The estimated average growth of real GDP in Africa slowed to 3.8% in 2022, from 4.8%. However, the report says 53 of Africa’s 54 countries posted positive growth.
Over the next two years, the continent is also expected to outperform the rest of the world in economic growth, with GDP averaging around 4% in 2023 and 2024. The growth rate is higher than the projected global averages of 2.7% and 3.2%, as per the AfDB.
However, the report sends a cautionary note on the outlook following current global and regional risks including soaring food and energy prices, tightening global financial conditions, and the associated increase in domestic debt service costs.
Climate change – with its damaging impact on domestic food supply – and the potential risk of policy reversal in countries holding elections in 2023 pose equally challenging threats.
The report advocates bold policy actions, calling for robust monetary and fiscal measures, backed by structural policies, to address the risks.
The AfDB Group President Akinwumi Adesina said the new report comes at a time when African economies, faced with significant headwinds, were proving their resilience.
“With 54 countries at different stages of growth, different economic structures, and diverse resource endowments, the pass-through effects of global shocks always differ by region and by country,” Adesina noted.
“Slowing global demand, tighter financial conditions, and disrupted supply chains, therefore, had differentiated impacts on African economies,” he said.
“Despite the confluence of multiple shocks, growth across all five African regions was positive in 2022—and the outlook for 2023–24 is projected to be stable.”
5 to Return to the top 10
Africa’s pre-Covid-19 top five performing economies are projected to grow by more than 5.5% on average in 2023-2024 and to reclaim their position among the world’s 10 fastest-growing economies.
These countries are Rwanda (7.9%), Côte d’Ivoire (7.1%), Benin (6.4%), Ethiopia (6.0%), and Tanzania (5.6%).
Other African countries are projected to grow by more than 5.5% in the 2023-24 period. They are DR Congo (6.8%), the Gambia (6.4%), Mozambique (6.5%), Niger (9.6%), Senegal (9.4%), and Togo (6.3%).
Featured Image: AfDB Group President Dr. Akinwumi Adesina says African economies are proving their resilience. [Photo File]