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East Africa leads the pack in economic growth


East Africa last year registered the fastest economic growth on the continent — 5.5 per cent — compared with the other regions, according to a new report by the Economic Commission for Africa.

The report, Urbanisation and Industrialisation for Africa’s Transformation, forecasts that the region’s growth will increase to 6.0 per cent in 2017 and 6.3 per cent in 2018, backed by a robust performance in Kenya, Rwanda and Tanzania.

In Kenya, investments in infrastructure and a high household consumption rate drove growth, amid a decline in tourism due to security concerns. In Rwanda, agriculture and services were key growth sectors, although low commodity prices, especially for coffee and tea, and poor infrastructure continued to hurt its growth potential.

In Tanzania, a robust domestic demand for the growing services and manufacturing sectors were the main drivers of economy in 2016.

According to the report, Central Africa will see growth rise to between 3.4 per cent and 4.2 per cent, driven by investment in energy and infrastructure and the services sector.

Fiscal deficits

In East Africa, the fiscal deficit widened from 4.0 per cent to 4.6 per cent in 2016. Kenya is building a new railway line and the government has increased salaries for its employees and budgetary allocation to county government.

Uganda, on the other hand has initiated hydropower projects. Oil exporting countries in Africa saw widening of fiscal deficits from 6.2 per cent in 2015 to 6.5 per cent of GDP due to low global prices. In contrast, oil importers registered an improved deficit margin of 5.5 per cent, from 5.6 per cent previous year.

The deficit in mineral-rich countries declined from 6.5 per cent of GDP in 2015 to 6.1 per cent slightly in 2016.

Inflation on the continent climbed to an average of 10 per cent from 7.5 per cent, blamed on drought, rising electricity prices and falling currencies.

It is expected to remain at that rate in 2017. Inflation rose in all sub-regions except Central Africa and East Africa, where, respectively, it declined to 2.3 per cent in 2016 from 2.8 per cent and to 5.3 per cent from 5.9 per cent, the latter largely due to downward trends in Ethiopia, Kenya and Tanzania.





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