HARARE, April 12 (The Source) – The World Bank has revised downwards its growth forecast for Sub-Saharan Africa from 4.4 percent to 3.3 percent due to depressed commodity prices, but sees a likely recovery in 2017.
Economic activity in the region slowed last year, with GDP growth averaging three percent, down from 4.5 percent in 2014.
Fellow Bretton Woods institution, the International Monetary Fund, last month forecast Zimbabwe’s economic growth at a modest 1,4 percent this year from 1,1 percent last year.
The World Bank’s African Pulse report, published on Monday, says the fall in commodity prices represents a significant shock for the region, as fuels, ore and metals account for more than 60 percent of the region’s exports.
“African Pulse finds that the recent commodity price drops have deteriorated the region’s terms of trade in 2016 by an estimated 16 percent, with commodity exporters seeing large terms-of-trade losses,” the report says.
After recording double digit growth rates following the adoption of the multi-currency regime in 2009, Zimbabwe, like the rest of the commodity-driven sub-Saharan region, is now suffering due to an underperforming Chinese economy which has driven commodity prices down.
Zimbabwe is also suffering from lack of domestic liquidity which, combined with poor foreign direct inflows (FDI), will continue to have a negative impact on growth. The slowdown in the region will further strain Zimbabwe’s economy.
“This low pace of growth, which translates into an increase in the region’s GDP per capita of less than 0.5 percent, was last seen in 2009 following the global financial crisis, and contrasts sharply with the robust 6.8 percent average annual GDP growth in Sub-Saharan Africa (SSA) from 2003-2008,” says the World Bank.
The report also notes that adverse domestic developments, such as electricity shortages, severe drought conditions, policy uncertainty, and security threats have worsened the direct impact of declining commodity prices.
For 2017–18, growth in the region is projected to average 4.5 percent.