World Bank boosts outlook for Sub-Saharan African economies

City A.M. Reporter
SUB-SAHARAN Africa’s economic growth should increase to 5.3 per cent next year, with strong private and public investment underpinning the region’s robust performance, the World Bank said yesterday.

The bank lifted its forecast for 2014 from the 5.1 per cent projected earlier this year.

The region was expected to grow 5.5 per cent in 2015, up from a previous forecast of 5.2 per cent.

Growth for this year is 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 per cent estimate for global growth in 2013, underscoring the attractiveness of the continent for investors.

But African countries could be vulnerable to declining commodity prices and the eventual tapering of the US Federal Reserve’s bond-buying stimulus, the organisation 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 implications of the increase in base rates are an increase in the cost of raising capital for developing countries, including those in Sub-Saharan Africa, with deleterious consequences on investment and growth,” the report said.