Sub-Saharan Africa Economy to Grow on Natural Resource Boom

Economic growth in sub-Saharan Africa is forecast to accelerate to 5.2 percent this year, driven by increasing investment to exploit the region’s natural resources and develop infrastructure, the World Bank said.

Gross domestic product rose 4.7 percent in 2013, the Washington-based bank said today in an e-mailed statement, citing Africa Pulse, a twice-yearly study it publishes. The outlook compares with a forecast in the October edition of Africa Pulse of 5.3 percent in 2014 from 4.9 percent last year.

The region attracted foreign direct investment worth a “near-record” $43 billion last year, up 16 percent from a year earlier, fueled by oil and gas discoveries in nations including Angola, Mozambique and Tanzania, the bank said.

Economic growth in 2013 was buoyed by Democratic Republic of Congo, Africa’s biggest copper producer, and iron-ore producer Sierra Leone, as well as the “non-resource-rich” nations of Ethiopia and Rwanda, according to the statement.

Challenges that may undermine expansion include weaker demand for African commodity exports and local food-price increases because of currency depreciation and poor crop-growing weather in some nations. Turmoil in South Sudan and Central African Republic also pose a “major threat” to those economies and their neighbors, according to the statement.

Infrastructure Limitations

Poor infrastructure will “continue to limit the region’s growth potential,” said Makhtar Diop, the World Bank’s vice president for Africa. “Significantly more infrastructure spending is needed in most countries in the region if they are to achieve a lasting transformation of their economies.”

Remittances to the region grew 6.2 percent to $32 billion last year, surpassing a record of $30 billion in 2011. Inflation slowed to an annual 6.3 percent from 10.7 percent in 2012 as global food and fuel price growth slowed and African governments pursued “prudent” monetary policies, it said.

Economic expansion in sub-Saharan Africa is projected at 5.4 percent next year and 2016, according to the World Bank.

The region’s economy is probably larger than current measurements indicate, and that would be reflected if countries followed Nigeria and rebased their GDP data, Francisco Ferreira, the bank’s chief economist for Africa, told reporters via a webcast news conference from Washington today.

Nigeria’s economy surpassed South Africa’s as the largest on the continent after the West African nation overhauled its gross domestic product data for the first time in two decades, the country’s statistics bureau announced yesterday.

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