African economies continue to expand

African economies are proving resilient to global industry hiccups and expansions are projected to continue, reports World Bank's new Africa's Pulse.

The bi-annual analysis of the issues shaping Africa's economic prospects projects that, as the rest of the world reels from weaker than expected global growth and stable or declining commodity prices, African economies continue to expand at a moderately rapid pace.

“Regional GDP growth projected to strengthen to 5.2 per cent yearly in 2015-16 from 4.6 per cent in 2014,” says the World Bank statement circulated to the media earlier this week.

“Significant public investment in infrastructure, increased agricultural production and expanding services in African retail, telecoms, transportation, and finance, are expected to continue to boost growth in the region,” the study reports.

This pick-up in growth is expected to occur in a context of lower commodity prices and lower foreign direct investment as a result of subdued global economic conditions.

Commodity prices remain highly significant to Africa's outlook since, as the report notes, "primary commodities continue to account for three-quarters of Sub-Saharan Africa's total goods exports, and the share of the region's top five exports in total exports has climbed to 60 per cent in 2013 from 41 per  cent in 1995."

"Overall, Africa is forecast to remain one of the world's three fastest growing regions and to maintain its impressive 20 years of continuous expansion" notes Francisco Ferreira, the World Bank's Chief Economist for Africa. 

"Downside risks that require enhanced preparedness include rising fiscal deficits in a number of countries; economic fallouts from the activities of terrorist groups such as Boko Haram and Al Shabaab and, most urgently, the onslaught of the Ebola epidemic in West Africa," says the statement in part.

A World Bank study of the likely economic impact of Ebola, released last month, suggested that if the virus continues to spread in the three worst-affected countries, its economic impact could grow eight-fold, dealing a potentially catastrophic blow to the already fragile states of Guinea, Liberia and Sierra Leone. 

The World Bank Group is mobilizing a $400 million financing package for the countries hardest hit by the crisis.

Growth trends in Africa: growth slowed notably in South Africa, the region's second largest economy, due to structural issues and low investor confidence.  

The South African economy expanded a modest 1.0 percent year-on-year in the second quarter of 2014, its lowest growth rate since the 2009 financial crisis. 

By contrast, economic activity strengthened in Nigeria, the region's largest economy.  GDP advanced 6.5 percent year-on-year in the second quarter, up from a 6.2 percent expansion in the first quarter.

Growth also remained robust in many of the region's low-income countries including notably Cote d'Ivoire, Ethiopia, Mozambique, and Tanzania.