Ethiopia will continue to be the fastest growing economy, says World Bank
By Daniel Amare – October 23, 2017
Ethiopia is likely to remain the fastest growing economy in the region, although public investment is expected to slow down, according to World Bank’s Africa’s Pulse report released this month. The report that looks at Africa’s economic and development status showed that the GDP growth in the Sub-Saharan region is also showing strength growing at 2.4 percent following a sharp slowdown over the past two years.
Findings show that among non-resource intensive countries, government debt in Ethiopia and Senegal is rising as these countries continue to borrow to finance ambitious infrastructure investment programs. In 2017, several countries, including Senegal, have tapped the international bond market to cover their financing needs.
Looking it at human development, the report shows that the prevalence of under-5 child stunting is significantly higher in low-income and fragile states on the continent, reaching nearly 40 percent. Even in upper-middle-income countries, the child stunting rate is just under 25 percent, still dramatically high. Stunting is a disorder that is associated with lower levels of schooling, cognitive ability, and earnings later in life.
On the bright side, some countries in the region are among the most successful countries in the world in having made significant progress in reducing stunting. “Kenya reduced its stunting rate from 40 to 26 percent over 15 years; Ethiopia lowered it by over 10 percentage points in a decade. Malawi, Senegal, and Tanzania also made progress, even though at a slower pace,” the report reads.
Looking at challenges, the report states that Africa may have challenges sustaining high and inclusive growth. Structural measures will be needed to boost productivity and investment and promote economic diversification. Analysis of the region’s growth dynamics shows that in economically less resilient countries, rising capital accumulation has been accompanied by falling efficiency of investment spending, but not in resilient ones.
“This suggests that the inefficiency of investment, which reflects insufficient skills and other capabilities for the adoption of new technologies, distortive policies, and resource misallocation, among other things-will need to be reduced if countries are to capture fully the benefits of higher investment,” it states.
It also underlines that as African countries seek new drivers of sustained, inclusive growth, attention to skills building is also growing. The region’s growing working-age population represents a major opportunity to reduce poverty and increase shared prosperity.
“But the region’s workforce is the least skilled in the world, constraining economic prospects. Building the skills, cognitive, socio-emotional, and technical, of today’s workers and future generations will be vital for realizing the development potential of the region,” it concludes.