Decline in commodity prices are taking a toll on the economies of countries in Sub-Saharan Africa. In its most recent assessment of the region, the World Bank noted that economic growth in the region will slow to 2.5 percent in 2016 from the earlier estimate of 3.0 percent in 2015.
In its latest Global Economic Prospects report, the bank said that commodity exporters and developing economies have struggled to adapt to low oil and other commodity prices. “Economic growth remains the most important driver of poverty reduction, and that’s why we’re very concerned that growth is slowing sharply in commodity-exporting developing countries due to depressed commodity prices,” World Bank Group president Jim Yong Kim said in a statement.
He added that it is critical for countries to pursue policies that will boost economic growth and improve the lives of those living in extreme poverty. The bank cautioned that oil exporters are a not likely to experience any significant pickup in consumption growth, while lower inflation in oil importers will support consumer spending.
However, on a positive tone, the bank noted that commodity importing emerging markets and developing economies have been more resilient than the exporters. These economies are set to expand at 5.8 percent in 2016, down modestly from an earlier forecast of 5.9 percent in 2015.
The World Bank has lowered its global economic growth forecast to 2.4 percent from 2.9 percent at the beginning of this year, citing persistently low commodity prices, weak global trade, diminishing capital inflows and slow growth in advanced economies. Subsequently, growth in these economies will advance at a meager 0.4 percent in 2016, a downward revision of 1.2 percentage points from the bank’s outlook in January.
The bank highlighted that the BRICS economies will have varied growth patterns. While China is expected to grow at 6.7 percent this year, Russia and Brazil will remain in deeper recession. India will hold steady at 7.6 percent and South Africa will grow at 0.6 percent this year, 0.8 of a percentage point more slowly than the January forecast.