- Economic growth estimated to reach 3.7 percent in 2015
- Falling commodity prices, tight financial conditions to blame
The World Bank cut its economic growth estimate for sub-Saharan Africa to the lowest since 2009 as falling commodity prices and tighter global financial conditions stem activity.
The Washington-based lender lowered its growth forecast for this year to 3.7 percent, 50 basis points down from its projection in June, and compared with 4.6 percent expansion recorded in 2014.
“The dramatic, ongoing drop in commodity prices has put pressure on rising fiscal deficits, adding to the challenge in countries with depleted policy buffers,” the bank’s acting Chief Economist Punam Chuhan-Pole said in an e-mailed statement on Monday.
Oil, minerals, metals and agricultural commodities account for nearly three-quarters of the region’s exports, the World Bank said in its bi-annual Africa’s Pulse report. Prices of natural gas, iron ore and coffee had fallen by more than 25 percent since June 2014, it said.
In countries such as South Africa, Zambia and Ghana, domestic factors including power shortages, were further hindering output, it said.
Growth across the region may accelerate to 4.4 percent in 2016 and 4.8 percent in the following year, according to the statement. Ethiopia, Ivory Coast, Mozambique, Rwanda and Tanzania may sustain annual growth rates of about 7 percent in the short term, supported by investments in energy and transport and consumer spending.
Sub-Saharan African nations had increased their fiscal deficits since the start of the global financial crisis as wages rose and revenues fell, the World Bank said.
“To withstand new shocks, governments in the region should improve the efficiency of public expenditures, such as prioritizing key investments, and strengthen tax administration to create fiscal space in their budgets,” Chuhan-Pole said.