2 minute read

1.27 GDP Growth Forecasts for East and Southern Africa

Excluding South Africa and Angola, the AFE subregion is expected to grow 4.5 percent next year, up from 3.6 percent, and 5.0 percent in 2024. regional growth and consistent with the earlier forecast, with a minor downward revision of 0.1 percentage point for 2023. Kenya is set to grow at 5.0 percent in 2023 (down from 5.5) and back up to 5.3 percent in 2024. The slowdown in economic activity reflects weak private consumption associated with FIGURE 1.27: GDP Growth Forecasts for East and Southern Africa contractionary monetary 8 policy as inflation remains elevated. Growth of private 6 consumption will decline 4 next year to 5.0 percent. Percent 2 Investment will remain subdued because of tight 0 financing conditions, growing by 7.5 percent in –2 2023, up from 7 percent. –4 On the production side, 2019 2020 2021 2022e 2023f 2024f overall growth reflects strong

East and Southern Africa East and Southern Africa, excl. South Africa growth in the agriculture

East and Southern Africa, excl. Angola and South Africa AFE Mineral and metal exporters excl. South Africa Non-resource-rich countries EAC and service sectors at 3.8 and 5.8 percent, respectively. Source: World Bank staff projections. Note: AFE = East and Southern Africa; e = estimate; EAC = East African Community; f = forecast; The agriculture sector is GDP = gross domestic product. expected to benefit from favorable weather conditions as the effects of the drought dissipate. However, Ethiopia will struggle to regain its pre-pandemic performance due to the prolonged conflict in the northern region, which drives out investment. The country’s real GDP is expected to grow steadily from 5.3 percent in 2023 (up from 3.5 percent) to 6.1 percent in 2024. On the demand side, the expansion is on the back of a recovery in investment (7.2 percent) after weak performance in 2022 (1.6 percent). On the supply side, the agriculture sector will pick up due to improved weather conditions. Botswana and Zambia will grow by 4.0 percent in 2023, from 3.2 and 3.3 percent, respectively, in 2022. While growth is projected to edge down in Botswana (3.7 percent) in 2024, it is forecast to pick up to 4.2 percent in Zambia. Private consumption and investment will support growth in Botswana, while fiscal consolidation continues. On the supply side, growth is buoyed by the industrial and service sectors. In Zambia, the economy will benefit from accommodative monetary policy, which is set to persist through 2023 and beyond. Fiscal policy will benefit somewhat from external earnings from elevated copper prices as well as assistance received from the IMF. Growth will stand on strong performance of the agriculture and service sectors. An upturn in industry from growth of 3.3 to 3.5 percent will be an additional contributor. Excluding Nigeria, AFW’s growth is projected at 5 percent in 2023 (up from 4.2 percent), and growth will firm in 2024 (5.6 percent). Growth in 2023 and 2024 is forecast to lose 0.6 and 0.4 percentage point, respectively, from the April forecasts (figure 1.28). These revisions are accounted for by elevated inflation associated with the war in Ukraine, contractionary macroeconomic policies, escalation of conflict in the Sahel region, and slowdown of the global economy. The expansion of the AFW subregion (3.9 percent) is higher than its counterpart in AFE (3.3 percent).

This article is from: