World Bank Boosts Sub-Saharan Africa's Economic Growth Forecast to 5.3%
The World Bank raised its forecast for economic growth in Sub-Saharan Africa to 5.3 percent in 2011 as the global economy recovers and the outlook improves for oil producers such as Nigeria and Angola.
Growth in the world’s poorest region will pick up from an estimated 4.7 percent in 2010, the Washington-based lender said in its Global Economic Prospects report on its website today. On June 9, the Bank had forecast growth of 5.1 percent this year.
“Growth is expected to be driven by continued recovery in the global economy,” the World Bank said. “Developments in domestic demand will continue to play a dominant role.”
South Africa’s economy, the biggest on the continent, will probably expand 3.5 percent this year and 4.1 percent in 2012 as the government steps up spending on infrastructure projects and consumer spending rebounds, the bank said. Those are in line with forecasts published by the National Treasury on Oct. 27.
The rand’s 12 percent surge against the dollar since June 1 is hindering exports, undermining growth in manufacturing, the World Bank said. The currency gained to 6.8229 per dollar as of 4:29 p.m. in Johannesburg from 6.8364 late yesterday.
South Africa has been and is likely to continue to be affected by the appreciation of the rand,” the bank said. Manufacturing “has become increasingly less competitive because of rand appreciation.”
Andrew Burns, manager of the World Bank’s Development Prospects Group, said steps taken to help stem temporary inflows, such as the central bank’s buying of dollars, are “appropriate,” though there isn’t an easy solution.
“The issue is what is the most effective, what is the best tool to do it,” Burns told reporters via videoconference from Paris today. “And there I think we’re still in the learning stage.”
The World Bank boosted its growth forecast for Nigeria, the region’s second-largest economy and the continent’s biggest oil producer, to 7.1 percent in 2011, from a previous estimate of 5.7 percent. Government spending on infrastructure projects and growth in non-oil industries should help support the economy, which is expected to grow 6.2 percent in 2012, the bank said.
Angola, Sub-Saharan Africa’s second-largest oil producer, will expand about 6.7 percent this year and 7.5 percent in 2012. Ghana, which began exporting oil for the first time this year, will have the fastest growth on the continent at 13.4 percent in 2011 and 10 percent in 2012, the World Bank said.
Kenya Outlook ‘Favorable’
The outlook in Kenya, East Africa’s biggest economy, “remains favorable,” with growth of 5.2 percent expected for this year and 5.5 percent in 2012, the bank said. While Kenya is benefiting from rising trade with the rest of the region, drought could damage agricultural output, derailing the growth outlook, the bank said.
The biggest risk to Africa’s growth prospects is another slump in the global economy as most countries on the continent have “depleted the fiscal space they had created during the pre-crisis period and have not had time to rebuild it,” the World Bank said.
Fiscal austerity programs in Europe, which is Africa’s biggest trading partner, may hamper the growth outlook, it said.
In Ivory Coast, where 247 people have died in violence sparked by a disputed election, “the expectation is that growth will not be as strong as it may have been otherwise,” Burns said. “We know that political turmoil is bad for growth.”
The World Bank projected that growth in the West African nation would advance to 4.1 percent in 2011 and 4.3 percent in 2012, from an estimated 3 percent in 2010. Burns declined to comment by how much growth may fall short of expectations.
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