What you need to know:
- In the latest Global Economic Prospects report released on June 6 in Washington DC, the World Bank said recoveries from earlier adverse economic and climate shocks, already fragile and incomplete in many countries, have been weakened by high and persistent inflation, further tightening global financial conditions, domestic policy tightening, and flare-ups of violence and social unrest in some countries
The World Bank Group has said growth in Sub-Saharan Africa (SSA) continued to decelerate earlier this year owing to various country-specific challenges and heightened external economic headwinds affecting the region’s economic growth.
In the latest Global Economic Prospects report released on June 6 in Washington DC, the World Bank said recoveries from earlier adverse economic and climate shocks, already fragile and incomplete in many countries, have been weakened by high and persistent inflation, further tightening global financial conditions, domestic policy tightening, and flare-ups of violence and social unrest in some countries.
It said growth in SSA is expected to decline further to 3.2 per cent in 2023 before picking up to 3.9 per cent in 2024.
“Surging inflation has aggravated the economic hardship of the poor and sharply increased food insecurity. SSA entered this year with 35 million more people in acute food insecurity than at the start of 2022. In several countries, especially in SSA low-income countries with fragile and conflict-affected situations, prolonged droughts and armed conflicts have compounded these effects,” said the World Bank.
The report added: “While headline inflation has recently moderated, annual food price inflation has remained in double digits in almost 70 per cent of countries reflecting higher costs of farming inputs, currency depreciations, and further supply disruptions due to inter-communal violence and adverse impacts of climate change.”
On May 31, 2023, the Uganda Bureau of Statistics said Uganda’s economy grew by 5.3 per cent for this fiscal year ending on June 30 2023. It also stated that Uganda’s annual headline inflation had declined to 6.2 per cent while the core inflation dropped to 5.6 per cent.
In the report, the World Bank Group explained that growth in the three largest SSA economies—Angola, Nigeria, and South Africa—slowed to 2.8 per cent in 2022 and continued to weaken in the first half of this year. The South African economy -crippled by severe power outages - continued to decelerate owing to persistent inflation, domestic policy tightening, and weaker external demand.
In Angola and Nigeria - SSA’s largest oil producers - the growth momentum has stalled amid lower energy prices and stagnant oil production. The post-pandemic rebound in Nigeria’s non-oil sector cooled earlier this year because of persistently high inflation, foreign exchange shortages, and shortages of banknotes caused by currency redesign.
The outlook indicates that the recovery in South Africa is projected to slow to 0.3 per cent this year as widespread power outages weigh heavily on activity and contribute to the persistence of inflation.
Growth in Nigeria is expected to remain barely above the population growth—far slower than needed to make significant inroads into mitigating extreme poverty.
Outlook downgrades, however, extend beyond the major regional economies with the elevated cost of living restraining private consumption and tighter policies holding back a pickup in investment in many countries. More broadly, worsened domestic vulnerabilities together with tight global financial conditions and weak global growth are expected to keep recoveries subdued.
“Per capita income in SSA is projected to grow by less than 1 per cent a year on average over the forecast horizon; while in over a fifth of the region’s economies, including three largest, average per capita income growth in 2023-24 is not expected to exceed 0.5 per cent and it will be negative in over a 10th. Thus, prospects for poverty reduction in the region remain bleak, with almost 40 per cent of SSA’s population living in countries with lower per capita incomes next year than in 2019,” said the World Bank.