African economies will continue to grow in 2015 due to private investment and consumption, which have been key drivers of Gross Domestic Product (GDP) over the past years, a new UN report projects.
Africa’s GDP is expected to accelerate from 3.5 per cent last year to 4.6 per cent in 2015 and 4.9 per cent in 2016, a UN report released in Addis Ababa on Thursday says.
Increasing consumer confidence, an expanding middle class, improvements in the business environment and a reduction in the costs of doing business have also contributed to the continent’s economic growth.
The report, entitled World Economic Situation and Prospects 2015 (WESP), notes East Africa is expected to experience the fastest growth, reaching 6.8 per cent in 2015 and 6.6 per cent in 2016.
Kenya and Uganda will be key drivers of growth, it points out, adding Kenya, particularly, to benefit from rapid expansion in banking and telecommunication services and investment in infrastructure.
Uganda’s growth will be supported by increasing activity in sectors such as construction, financial services, transport and telecommunications.
North and Southern Africa are expected to experience acceleration in growth, from 1.6 per cent and 2.9 per cent in 2014 to 3.9 per cent and 3.6 per cent in 2015, respectively.
Central and West Africa, on the other hand, are expected to experience a moderate increase in growth, from 4.3 per cent and 5.9 per cent in 2014 to 4.7 per cent and 6.2 per cent in 2015, respectively.
World Economic Situation and Prospects 2015 also put forward various internal and external risks that “may derail Africa’s economic performance” this year.
A prolonged period of lower oil prices, a weakening in the developed economies, or a further slowdown in China’s demand for commodities, as a risk that could negatively affect the continent’s trade earnings.
“Tighter global financial conditions in developed economies such as the US may also result in the outflow of private capital and increase currency volatility,” it says.
If not contained, UN’s report says the outbreak of Ebola would also pose a major risk for the West African sub-region’s growth prospects.