Africa Expected to See Moderate Growth Recovery in 2017: UN report

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In short
Higher global commodity prices and stronger domestic demand will support Africas growth. East Africa is positioned to remain the fastest-growing sub region.

A moderate economic growth recovery is projected in Africa for 2017-18, even as the global economy continues to be trapped in a prolonged period of slow growth.
 
A new United Nations World Economic Situation and Prospects (WESP) 2017 Report released today in Ethiopia  says Africa is expected to see a recovery in growth, with GDP expanding by 3.2 per cent in 2017 and 3.8 per cent in 2018, up from 1.7 per cent in 2016
 
It says the projected increase in global commodity prices will ease fiscal and external pressures for commodity exporters. It notes that a strong growth rebound in these countries appears unlikely.
 
Countries under the East African Community and some Western African economies are likely to enjoy a more favorable growth outlook according the UN's flagship publication on expected trends in the global economy.
 
 
The report notes large differences in growth prospects among the five African sub regions. East Africa is positioned to remain the fastest-growing sub region, with aggregate GDP projected to expand by about 6 per cent in 2017 and 2018, helped by the rapid expansion of domestic markets and strong spending on infrastructure.
 

The report also takes note of marked differences in the inflation dynamics across the region. For the commodity-dependent economies, the weakening of domestic currencies fuelled imported inflation.
 
The adverse impact of drought conditions and rising electricity tariffs added further upward pressure on inflation.
 
In Angola, Mozambique and Nigeria, inflation reached multi-year highs. As high inflationary pressures are expected to persist in these economies, monetary policy stances will likely remain tight.
 
For Africa, the report identifies renewed weakness in commodity prices and a sharper-than-expected growth moderation in China as major risks.

On the domestic side, an escalation of security concerns and political unrest could deter foreign investment and severely disrupt economic activity in some countries.
 
The report calls for a more balanced policy approach to not only restore robust growth in the medium term, but also to achieve greater progress on sustainable development.
 
Given that commodity prices are projected to increase only modestly, the report also underscores the need for African economies to further strengthen policy measures to tackle domestic structural weaknesses, including measures to accelerate economic diversification, rebuild policy buffers and promote stronger job creation.
 
At a global level, the report says the world economy expanded by just 2.2 per cent, the slowest rate of growth since the Great Recession of 2009.
 
Underpinning the sluggish global economy are the feeble pace of global investment, dwindling world trade growth, flagging productivity growth and high levels of debt.

World gross product is forecast to expand by 2.7 per cent in 2017 and 2.9 per cent in 2018, with this modest recovery more an indication of economic stabilization than a signal of a robust and sustained revival of global demand.

 It says given the close linkages between demand, investment, trade and productivity, the extended episode of weak global growth may prove self-perpetuating in the absence of concerted policy efforts to revive investment and foster a recovery in productivity. 

Lenni Montiel is the United Nations Assistant Secretary-General for Economic Development in the Department of Economic and Social Affairs. He explained the basis of the report.
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Montiel and his colleagues recommend stronger policy efforts to stimulate investment and productivity.
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That according to the report would impede progress towards the Sustainable Development Goals (SDGs), particularly the goals of eradicating extreme poverty and creating decent work for all.
 
 

 

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