Releasing its Africa’s Pulse report on Monday, the World Bank warned that the “political crisis”, coupled with the sharp fall in commodity prices and the crippling effects of the drought will negatively impact the country’s ability to grow its stagnating economy.
“Political uncertainty remains a perennial issue in SA and I think it is very important to demonstrate to investors how important it is that growth comes back and that the investment climate is improving, so that it is profitable for them to come back and to create jobs,” Mark Hanusch, World Bank senior economist in SA was quoted saying in a Business Day report.
The Bank forecasts that SA’s economy will grow by around 0,8% this year, and by 1,1% in 2017, while it expects the sub-Saharan Africa region’s economy to grow by 3,3% this year – down from 4,5% last year and significantly slower than the healthy rate of 6,8% the region experienced between 2003 and 2008.
The World Bank attributes the slowdown to the steep decline in global commodity prices, which fell by 67% between June 2014 and December 2015, as well as weak economic growth.
Growth in the region is expected to rise to 4,5% between 2017 and 2018.
“As countries adjust to a more challenging global environment, stronger efforts to increase domestic resource mobilisation will be needed. With the trend of falling commodity prices, particularly oil and gas, it is time to accelerate all reforms that will unleash the growth potential for Africa and provide affordable electricity for the African people,” World Bank Vice President for Africa Makhtar Diop said.
The World Bank’s Acting Chief Economist and the author of the report, Punam Chuhan-Pole also noted that African cities need to become “less costly for firms and more appealing to investors” in order to promote growth and social development.