Sub-Saharan Africa set to grow at 5.3 per cent in 2014, says World Bank

money sxcSub-Saharan Africa’s economic growth may increase to 5.3 per cent next year, with steady private and public investment underpinning the region’s robust performance, according to a World Bank report

The bank lifted its forecast for 2014 from the 5.1 per cent projected earlier this year. The region, according to the bank, will be expected to grow 5.5 per cent in 2015, up from a previous forecast of 5.2 per cent, it said in its bi-annual Africa’s Pulse report.

Growth for this year has been forecast at 4.9 per cent, higher than last year’s 4.2 per cent. The figure is more than double the bank’s 2.3 percent estimate for global growth in 2013.

African countries could, however, be vulnerable to declining commodity prices and the eventual tapering of the US Federal Reserve’s bond-buying stimulus, the World Bank said.

It cited a 2010 World Bank study suggesting that a 100-basis point increase in high-income country base interest rates is correlated with a 110- to 157-basis point rise in developing country yields.

The bank also pointed out that although strong export growth has also contributed to the region’s economic advance, many countries were prone to major swings in fortunes because they relied on a single commodity for more than 50 per cent of export earnings.

World Bank Africa economist Punam Chuhan-Pole, the report’s author said, “High dependence on one or a few commodities makes Africa’s resource-rich countries vulnerable to sharp movements in prices of these commodities.”

The report also added that while sustained growth was necessary, it was not enough to reduce poverty significantly and nearly half of all Africans currently live in extreme poverty.

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