Africa to grow by 4.5% in 2015 despite Ebola and weak oil prices
The OECD-led report forecasts a robust growth rate of 4.5% for Africa, which is in line with the International Monetary Fund’s projections of 4.5% in 2015, but slightly more optimistic than the World Bank’s forecast of 4.0%.(Image:ventureburn.com)
Africa will grow by 4.5% in 2015, displaying resilience to both commodity prices and the devastating Ebola epidemic, as per an annual report released by the Organization for Economic Cooperation and Development (OECD) together with the African Development Bank (AfDB) and the UN Development Programme (UNDP).
The continent’s future growth could be spurred by its population doubling to two billion over the next 35 years, repeating in Africa the economic boom earlier seen in Asia’s biggest countries.
“Africa’s gross domestic product (GDP) growth is expected to strengthen to 4.5% in 2015 and 5.0% in 2016 after subdued expansion in 2013 by 3.5% and by 3.9% in 2014,” said the report, co-authored by the OECD, the AfDB and the UNDP.
The continent has so far been relatively resilient to the sharp fall in international commodity prices, in instances where crude prices dropped by more than 50% between June and January.
However, continuous decrease of commodity prices might force the hands of governments in resource-rich economies.
The latest forecast is a downward revision from projections made in 2014, which suggested that Africa’s economy was going to expand by a more optimistic 5.7% this year.
At the same time, economists noted that Africa’s increasing population could boost growth in much the same way that population booms fuelled development in China and India.
However, challenges exist in terms of failure to absorb the enormous youth bulge in the labour market where it is estimated that 23 million youth are expected to enter the African labour market this year alone, according to the report.
Last year the North Africa region dragged down the continent’s growth rates as a result of the fall-out from the 2011 Arab Spring popular uprisings and Southern Africa slowed to below 3.0% in 2014 due to labour unrest in South Africa, which pulled down the continent’s most advanced economy to a mere 1.5% growth rate.
However, despite being ravaged by the deadly Ebola virus, the West African region fared relatively well, posting an average 6.0% growth last year.
Oil-rich Nigeria, the continent’s largest economy, which was not at the epicentre of the Ebola crisis, saw 6.3% growth in 2014, fuelled mainly by non-oil sectors, displaying sectoral diversification that bodes well for the future of the economy.
Finally, the latest predictions for the emerging continent in the OECD-led report are in line with the International Monetary Fund’s projections of 4.5% in 2015, but are slightly more optimistic than the World Bank’s forecast of 4.0%.