Harare – The World Bank Group has said Sub Saharan Africa macroeconomic instability is negatively impacting economic growth whose growth has since slowed down from 2.5 percent in 2017 from 2.3 percent in 2018.
In the 14th edition of Africa’s Pulse report released on Monday in Washington, the Bank indicated the slower growth largely stem from the economic and socio-political woes on the domestic front compounded in part by exogenous factors such as the on-going global uncertainty like the USA/China trade war.
“The slower-than-expected overall growth reflects on-going global uncertainty, but increasingly comes from domestic macroeconomic instability including poorly managed debt, inflation, and deficits; political and regulatory uncertainty; and fragility that are having visible negative impacts on some African economies,” reads part of the report.
“It also belies stronger performance in several smaller economies that continue to grow steadily.”
In the context of Zimbabwe, debt levels have escalated to over US$18 billion half of which is foreign debt, 114 percent of GDP way above the legal threshold.
The country is also battling high inflation levels which reached a 10 year high of 59.4 percent in February 2019 amid further growth pressure post currency liberalisation.
Earlier in January, the World Bank projected a higher GDP growth for Zimbabwe in 2019 at 3.7 percent which is ahead of government’s own forecast of 3 percent.
Elsewhere, World Bank’s growth projections for South Africa which is Zimbabwe’s biggest trading partner remained unchanged for 2019 at 1.3 percent saying that growth in one of the biggest economies on the continent has been hampered by low business confidence and the recent spate of power cuts.
Africa’s Pulse report also found that fragility in a handful of countries is costing sub-Saharan Africa over half a percentage point of growth per year. This adds up to 2.6 percentage points over 5 years.
“The drivers of fragility have evolved over time, and so too must the solutions,” said Cesar Calderon, Lead Economist and Lead author of the report.
“Countries have a real opportunity to move from fragility to opportunity by cooperating across borders to tackle instability, violence, and climate change.”
As part of solutions to tackle the slow growth, World Bank advised that African countries should harness digital transformation which can “increase growth by nearly two percentage points per year and reduce poverty by nearly one percentage point per year in Sub-Saharan Africa alone.”
“This is a game-changer for Africa,” said Albert Zeufack, World Bank Chief Economist for Africa.
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