World Bank: Growth to slow down in 2013

BY THE GUARDIAN REPORTER

19th January 2013

World Bank

Tanzania is one among Sub-Sahara African countries which will experience slower economic growth in the next two years, the World Bank has stated.

In its executive summary of the Global Economic Prospects report availed to the media yesterday, the World Bank says that for the year 2013, some countries Tanzania inclusive would experience projected growth at an average of 4.9 percent and would gradually strengthen to 5.2 per cent in 2015.

In September last year the Bank of Tanzania announced that prospects of the country’s economic growth stand at 7.6 percent. It said this was still in scope following the achievement of 6.7 per cent growth recorded in the first quarter of 2012.

“The ongoing increase in export volumes from several countries that have discovered mineral deposits in recent years (Ghana, Kenya, Mozambique, Niger, Sierra Leone, Tanzania and Uganda) should boost growth prospects. Overall, the region is projected to grow at its pre-crisis average rate of five percent over the 2013-15 period (4.9 percent in 2013, gradually strengthening to 5.2 percent in 2015). Excluding, South Africa, the region’s growth will average 6 percent over the 2013-15 period,” the report indicated.

“Medium-term growth prospects remain strong and should be supported by a pick-up in the global economy, the still high commodity prices and increased investment,” the World Bank noted.

It maintains that since the year 2000, investment in the region (Sub-Saharan Africa) has increased steadily from 15.9 percent of GDP to slightly over 22 percent of GDP in 2012.

“This is expected to continue, particularly so as an increasing number of the region’s economies are able to tap into international capital markets to help address binding infrastructural constraints (in 2012 Zambia issued its debut international bond, a $750 million euro bond, which was oversubscribed by 15 times),” it points out.

On the state of regional economies in 2012 the World Bank report says Gross Domestic Product (GDP) growth in the region remained robust at 4.6 percent, notwithstanding the slowdown in the global economy. “Indeed, excluding the region’s largest and most globally integrated economy, South Africa, GDP growth in the region was at a strong 5.8 percent in 2012, with a third of countries in the region growing by at least 6 percent.”

Robust domestic demand, steady remittance flows, still high commodity prices, and increased export volumes (thanks to increased investment flows to the natural resource sector in recent years) were supportive of the region’s growth in 2012.

“Besides the drag from a weaker global economy, domestic factors including earlier monetary policy tightening (Kenya and Uganda), protracted labor disputes (South Africa), and political unrests (Mali and Guinea Bissau) weakened growth in a number of countries in the region,” it said.

Net private capital flows to the region increased by 3.3 percent to a record high at $54.5 billion in 2012. Much of the increase in net capital flows came in the form of increased foreign direct investment flows to the region, which increased to $37.7 billion in 2012 from $35.7 billion in 2011, notwithstanding the 6.6 percent decline in foreign direct investment flows to developing countries in 2012.

“Exports grew strongly in the first half of the year. However, a sharp deceleration of industrial commodities and oil exports occurred in the third quarter. Tourism, an important driver of growth in the region, remained robust, with strong tourist arrivals in many of the popular destinations, including South Africa, Mauritius, Sierra Leone, Madagascar and Cape Verde,” the report added.

SOURCE: THE GUARDIAN