East Africa to buck trend of global slowdown in 2024: W.Bank

Global growth is projected to slow down for the third year in a row—from 2.6 percent last year to 2.4 percent in 2024, almost three-quarters of a percentage point below the average of the 2010s.

Mounting geopolitical tensions could create fresh near-term hazards for the world economy as the medium-term outlook has darkened for many developing economies amid slowing growth in most major economies, sluggish global trade, and the tightest financial conditions in decades.

“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” said the World Bank Group’s chief economist and senior vice president Indermit Gill.

“Near-term growth will remain weak, leaving many developing countries—especially the poorest—stuck in a trap: with paralysing levels of debt and tenuous access to food for nearly one out of every three people. That would obstruct progress on many global priorities. Opportunities still exist to turn the tide. This report offers a clear way forward: it spells out the transformation that can be achieved if governments act now to accelerate investment and strengthen fiscal policy frameworks,” he said.

However, most of the East African Community (EAC) states are forecast to record better growth in 2024 than what they are estimated to have achieved in 2023, according to the World Bank.

Tanzania is forecast to increase growth from estimated 5.1 percent in 2023 to 5.5 in 2024 and 6.1 percent next year, while that of Kenya is expected to rise from 5.0 percent to 5.2 percent and 5.3 percent.

Rwanda is projected to accelerate growth from 6.9 percent to 7.5 percent and 7.8 percent during the period while Uganda will increase its growth from 5.3 percent in 2023 to 6.0 percent this year and 6.6 percent next year.

South Sudan is also forecast to rebound from recession (-0.4 percent) in 2023 to a growth of 2.3 percent this year and 2.4 percent in 2025.

The Democratic Republic of Congo (DRC) economic growth is projected to slow from the estimated 6.8 percent last year to 6.5 percent in 2023 and 6.2 next year.

Research think tank Repoa executive director Donald Mmari said the EAC countries have a potential to grow further due to increasing intra-regional trade and good prospects in agriculture production.

“Despite the fact that the global growth is slowing, the projected 2.4 percent is significant and that will also push the growth of the EAC countries,” said Dr Mmari.

He said the EAC countries can push ahead with tourism marketing and increase exports in order to boost generation of foreign earnings.

Growth in sub-Saharan Africa (SSA) decelerated to an estimated 2.9 percent in 2023, which is 0.3 percentage point lower than projected in June, the World Bank said, adding however that, it is expected to accelerate to 3.8 percent in 2024 and firm further to 4.1 percent in 2025 as inflationary pressures fade and financial conditions ease.

Downside risks

Dr Mmari said the EAC outlook is subject to several downside risks which include volatile energy prices and global geopolitics which can result into sanctions that affect exports of the local products and flow of foreign direct investments (FDIs).

The risks include a rise in political instability and violence, such as the intensification of the conflict in the Middle East, disruptions to global or local trade and production, increased frequency and intensity of adverse weather events, a sharper-than-expected global economic slowdown, and higher risk of government defaults.

An escalation of the conflict in the Middle East could exacerbate food insecurity in SSA as a conflict-induced sustained oil price spike would not only raise food prices by increasing production and transportation costs but could also disrupt supply chains, the World Bank said.

Although global food and energy prices have retreated from their peaks in 2022, disruptions to global or local trade and production could reignite consumer price inflation, especially food price inflation, throughout the region.

“Such disruptions, especially in mining and agriculture, could be triggered by extreme weather events linked partly to climate change. Further increases in violent conflicts could push growth below the baseline and result in extended humanitarian crises in many of SSA’s most economically vulnerable countries,” it said, adding that the sharp rise in public debt service costs in many SSA economies since the pandemic has increased the need for debt reduction, particularly in highly indebted countries.