The World Bank on Wednesday said economic growth in Sub-Saharan Africa is set to slow from 3.6% in 2022 to 3.1% in 2023, as region gets dragged down by uncertainty in the global economy, underperformance of the continent’s largest economies, high inflation, and a sharp deceleration of investment growth,

These were contained in the latest Africa’s Pulse, the World Bank’s April 2023 economic update for Sub-Saharan Africa.

According to the global bank, economic activity in South Africa is set to weak on further in 2023 (0.5% annual growth) as the energy crisis deepens, while the growth recovery in Nigeria for 2023 (2.8%) is still fragile as oil production remains subdued. The real gross domestic product (GDP) growth of the Western and Central Africa subregion is estimated to decline to 3.4% in 2023 from 3.7% in 2022, while that of Eastern and Southern Africa declines to 3.0% in 2023 from 3.5% in 2022.

“Weak growth combined with debt vulnerabilities and dismal investment growth risks a lost decade in poverty reduction,” said Andrew Dabalen, World Bank Chief Economist for Africa. “Policy makers need to redouble efforts to curb inflation, boost domestic resource mobilization, and enact pro-growth reforms—while continuing to help the poorest households cope with the rising costs of living.”

The World Bank added that debt distress risks remain high with 22 countries in the region at high risk of external debt distress or in debt distress as of December 2022. Unfavorable global financial conditions have increased borrowing costs and debt service costs in Africa, diverting money from badly needed development investments and threatening macro-fiscal stability.

“Stubbornly high inflation and low investment growth continue to constrain African economies. While headline inflation appears to have peaked in the past year, inflation is set to remain high at 7.5% for 2023, and above central bank target bands for most countries. Investment growth in Sub-Saharan Africa fell from 6.8% in 2010-13 to 1.6% in 2021, with a sharper slowdown in Eastern and Southern Africa than in Western and Central Africa”, the bank stated. (Daily Sun)

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