The World Bank has revised the economic growth projection for Sub-Saharan Africa to 3 per cent from 3.4 per cent as earlier indicated in April, according to the latest Africa Pulse report.
The slight cut is mainly attributed to large countries that continue to drag down growth in the region, most notably Sudan which saw a collapse of economic activity of 20 per cent in 2023 and is estimated to collapse by 15 per cent in 2024 as a result of the economic impact of the country’s catastrophic war.
ALSO READ: African economies to grow by 3.4% in 2024
The estimated economic growth in the region of 3 per cent in 2024 and 4 per cent in 2025 will be driven by increased private consumption and investments across countries, following the ease in inflationary pressures around the world.
The East African Community (EAC) is ranked the best performer in the subregion, with a projected growth rate of 4.7 per cent in 2024 and an expected rate of 5.7 per cent in 2025. Countries such as Kenya, Rwanda, Tanzania, and Uganda are the largest contributors to the region’s performance.
According to the report, the contribution of investment has also increased as countries in the region are creating room for current and future policy rate cuts.
The report suggests that as inflationary pressures continue receding and expectations remain well-anchored, central banks in advanced countries and in the region will have a more accommodative monetary policy stance, thus boosting private consumption and investment throughout the next year.
However, World Bank economists remained cautious with risks attached to the outlook, highlighting the impact that geopolitical tensions could have on economic activities, in particular, a conflict-related disruption to global oil supply could push oil prices markedly higher and undermine the disinflation process.
This is in addition to elevated trade policy uncertainty and trade restrictions, as well as climate-related risks.
Rwanda’s economic outlook
According to the report, the World Bank projects Rwanda’s economy to grow by 7.6 per cent in 2024 and 7.8 per cent in 2025, the highest in the Sub-Saharan region.
ALSO READ: 2024: Rwanda to lead economic growth in East Africa
The World Bank report forecasts consumer prices to average 6.8 per cent in 2024 and 5 per cent in 2025.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
But the National Bank of Rwanda (BNR) projects inflation to average 5 per cent throughout 2024 and 2025.
The National Institute of Statistics of Rwanda (NISR) indicated that inflation only rose by 2.5 per cent in September.
Broadly, African governments’ fiscal positions remain vulnerable to global economic disruptions, necessitating policy actions to build buffers to prevent or cope with future shocks.
For instance, Rwanda is expected to face double-digit current account deficits, the report shows. These deficits contribute to exchange rate instability and put pressure on international reserves.
“In Rwanda, the current account deficit is projected to remain large in 2024 due to increased imports required for the post-flood reconstruction and the large airport construction project,” the report reads in part.
The current deficit account remains vulnerable across all countries with double-digit deficits.
The World Bank highlighted that investments in quality education on the continent are critical to ensuring the future of human capital and economic development.
Currently, Africa’s workforce is the least skilled globally, which poses a significant barrier to long-term economic growth, with research showing that countries with the highest GDP per capita also have relatively high levels of skills.
Responding to megatrends, including conflict, climate change, as well as rapid and disruptive digital advancements, requires robust education strategies and investments, it added.
