What you need to know:
Factor. Growth in developed nations to impact sub-Saharan Africa.
Kampala. The World Bank has projected the global economy to grow by 2.9 per cent in 2016 as advanced economies gain speed to drive growth in other regions of the world.
This is slightly higher compared to last year’s by 2.4 per cent growth rate.
The high global growth rate, according to the WB, will support economic growth in Least Developing Countries such as Uganda in form of a pick in demand for commodity exports and Foreign Direct Investment, among other benefits of high growth.
During the release of its Global Economic Prospects (GEP) report for 2016 in Washington DC on Wednesday, theWorld Bank said weak growth among major emerging markets will weigh on global growth in 2016.
It warns that spillovers from major emerging markets will constrain growth in developing countries and pose a threat to hard-won gains in raising people out of poverty.
“More than 40 per cent of the world’s poor live in the developing countries where growth slowed in 2015. Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable,” said World Bank Group president Jim Yong Kim.
Dr Kim added: “The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies.”
Global economic growth was less than expected in 2015, when falling commodity prices, flagging trade and capital flows, and episodes of financial volatility sapped economic activity.
The World Bank stresses that firmer growth ahead will depend on continued momentum in high income countries, the stabilisation of commodity prices, and China’s gradual transition towards a more consumption and services-based growth model.
Developing economies are forecast to expand by 4.8 per cent in 2016, less than expected earlier but up from a post-crisis low of 4.3 per cent in the year just ended.
Growth is projected to slow further in China, while Russia and Brazil are expected to remain in recession in 2016.
Growth in sub-Saharan Africa where Uganda is found, is forecast to accelerate to 4.2 per cent in 2016 from 3.4 per cent in 2015 as commodity prices stabilise.
Growth for Uganda
Uganda’s 2015/2016 economic growth forecast has been projected at 5 per cent from a previous 5.8 per cent, a position blamed on high lending rates.
In a recent budget policy paper, the Finance ministry also forecasts growth to go back to 5.8 percent in financial year 2016/2017.