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AfDB reports on economic growth in Central Africa

The Bank expects growth to 2.4 percent in 2018 and 3 to 4 percent in 2019.

Devdiscourse News Desk
Updated: 24-03-2018 15:11 IST
AfDB reports on economic growth in Central Africa

Despite the slowdown in African performance in 2016, the long-term growth prospects for the Central African region remain encouraging. (Image credit: Twitter)

The African Development Bank (AfDB) released its first report of the year, on the Central African Economic Outlook, in Abidjan, Côte d'Ivoire. According to the document that presents the future economic forecasts of the eight countries of the region, Cameroon was the first economy in 2017, contributing about 29 percent of regional GDP, followed by the Equatorial Guinea (11 percent), Gabon (13 percent), DRC (24 percent), Congo (11 percent) and Chad (11 percent).

The lowest economies being those of the Central African Republic, which contributed 1.2 percent to regional growth, and the small island state of São Tomé and Príncipe with a contribution of 0.3 percent.

According to the report, Central Africa experienced very slow economic growth between 2016 and 2017. For the past year, the average growth in the region was estimated at 0.9 percent, compared to around 0.1 percent in 2016. The authors of this report consider the causes of this situation to be, the fall in commodity prices (on which most of the region's economies depends), as well as the unstable security situation that is shaking several countries in the region, as per news du camer.

Increased investment in infrastructure, the resilience of service sectors and the recovery of the agricultural sector, however, spurred the rise, albeit small, in regional GDP in 2017. However, the outlook is positive for the region, with upward trend commodity prices and growth in domestic demand, sound macroeconomic management, and a more favorable institutional environment should help maintain resilient growth, as per news du camer.

Growth forecasts upward

Indeed, domestic demand has continued to drive growth in several countries in the region. However, external demand has remained moderate, especially in advanced economies, but also in emerging economies. Export values of basic products have declined due to low prices. However, Central Africa's exports are expected to strengthen in 2018 and 2019 following the rebound in the global economy.

With regard to the growth sectors, it is the industry that contributes the most to the economy of the region, with 42 percent of Central Africa's GDP, compared to 41 percent for the services sector and 17 percent for agriculture. For 2018 and 2019, the region is expected to experience a surge in economic growth, as per news du camer.

Thus, the Bank expects growth to 2.4 percent in 2018 and 3 to 4 percent in 2019. The expected strengthening of the zone's exports, boosted by the rebound in the global economy, should enable the region to achieve this performance in 2018 and 2019. Infrastructure, services, and agriculture meanwhile should also bring this growth. As the pan-African institution points to an improvement in the overall fiscal deficit in the region (2.1 percent of GDP in 2017), which is expected to continue this year and the next.

According to news du camer, the global economy faces several major challenges: Brexit uncertainty, price shocks in global commodity markets, and security threats around the world and in Africa. The threat of economic stagnation in advanced economies and persistent fears of rapid declines in growth in China are also risk factors. However, there are some important areas of growth, particularly in emerging market economies, which " promise growth opportunities for the economies of the Central African region, " says the African Development Bank (AfDB).

Despite the slowdown in African performance in 2016, the long-term growth prospects for the Central African region remain encouraging. "Rising global commodity prices should ease the fiscal constraints of many countries," says the bank.

Meanwhile, " economic development opportunities in the region include oil reserves in the Gulf of Guinea, vast deposits of metals and minerals, huge water resources in the Congo-Oubangui-Sangha Basin and the Great Lakes, and a large rainforest in the Congo Basin ". These largely unexploited and underutilized resources to believe the report is can nonetheless help to ' stimulate growth in the region", as per news du camer.

Economic and political uncertainty is likely to hamper growth and has held back investments in several countries, including Cameroon, Central Africa, and the Democratic Republic of Congo (DRC). Although Cameroon continues to enjoy relative political stability, tensions in border areas linked to Boko Haram and incursions by rebel groups in Central Africa and Chad could delay beneficial effects.

Macroeconomic stability

According to the Bank's report, inflation in the Central African region was estimated at 10.1 percent in 2017, compared to 2.6 percent in 2016. It is expected to reach 10.4 percent in 2018, then fall slightly to 9.1 percent in 2019. This will be mainly driven by the DRC, where it should reach a double-digit rate of 43 percent in 2017 and 2018.