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“Business confidence is likely to gradually firm up with the change in the political leadership, but growth prospects remain weighed down by structural bottlenecks”, the worldwide lender said in its latest World Economic Outlook published in Washington.
He says the 17th Edition of the African Pulse has recorded three main findings, noting the first finding is economic growth has rebounded in sub-Saharan Africa, but such growth was not fast enough.
The IMF said prospects for developing economies to grow per-capita incomes face hard prospects over the next five years, especially in commodity-exporting countries in the Middle East, sub-Saharan Africa, Latin America and the Caribbean.
In its recent Africa Pulse report, the World Bank warns that a continuous rise in the country’s debt to GDP will not only leave Ghana a debt distressed economy but also have the debt levels unsustainable.
The World Bank said sub-Saharan Africa’s economy growth was projected to reach 3.1 percent in 2018, and an average of 3.6 percent between 2019 and 2020.
“Our government needs to speedup microeconomic reforms, and deepen structure reforms, if we are to bring growth back to Africa to pre-crisis level”, he stresses. The bi-annual analysis on the state of the African economies including Ghana indicates that growth in the non-resource-industrial sectors in oil and metal exporters has yet to pick up underscoring the slow structural transformation in the country.
The IMF said the reforms would improve infrastructure in transport and telecommunication sectors to spur growth.
Nigeria and South Africa are the continent’s biggest economies accounting for nearly half of the region’s GDP.
Higher debt burdens and the increasing exposure to market risks raise concerns about debt sustainability: 18 countries were classified at high-risk of debt distress in March 2018, compared with eight in 2013, according to the report.
Ms Punam Chuchan-Pole, the World Bank Lead Economist, and Author of the Report, said for many African countries, the economic recovery was vulnerable to fluctuations in commodity prices and production. It said lower USA corporate income tax rates and accelerated investments due to a temporary tax break would boost US growth through 2020, but these effects would then reverse quickly, causing a slowdown.
The report says that achieving universal electrification in Sub-Saharan Africa will require a combination of solutions involving the national grid, as well as “mini-grids” and “micro-grids” serving small concentrations of electricity users, and off-grid home-scale systems.
“Especially important are steps to rationalise electricity pricing, reducing regulatory barriers that limit private sector investment in grid or off-grid power production, make utility operations more efficient and transparent, and foster more independent sector regulations”, she added.